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IRS.gov Website

Frequently Asked Tax Questions

Interest, Dividends, Other Types of Income - 1099–MISC, Independent Contractors, and Self-employed

  1. I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed, I do not have a business. How do I report this income?
  2. I am self-employed. How do I report my income and how do I pay Medicare and Social Security taxes?
  3. My son is a newspaper carrier. I would like to know if this income is subject to Social Security and Medicare tax and if I must file a Schedule C for him.
  4. I received a Form 1099-MISC with an amount in box 7, (nonemployee compensation). What forms and schedules should be used to report income earned as an independent contractor?
  5. What, if any, quarterly forms must I file to report income as an independent contractor?
  6. My child has joined AmeriCorps and has received an income statement. Are these payments taxable?

Rev. date: 08/18/2012

I received a Form 1099-MISC instead of a Form W-2. I'm not self-employed, I do not have a business. How do I report this income?

If payment for services you provided is listed in box 7 of Form 1099-MISC (PDF), you are being treated as a self-employed worker, also referred to as an independent contractor:
There are three basic areas that are relevant to determine employment status:
For more information on employer-employee relationships, refer to Chapter 2 of Publication 15, Circular E, Employer's Tax Guide and Chapter 2 of Publication 15-A (PDF), Employer's Supplemental Tax Guide.
If you think that you were, or are, an employee and you would like the IRS to issue a determination, you may submit Form SS-8 (PDF), Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding.
Unless you think you were an employee, you report your non-employee compensation on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or Form 1040, Schedule C-EZ (PDF), Net Profit from Business:

Rev. date: 11/13/2012

I am self-employed. How do I report my income and how do I pay Medicare and Social Security taxes?

You are a sole proprietor if you are the sole owner of a business that is not a corporation:
If the total of your net earnings from self-employment from all businesses is $400 or more use Form 1040, Schedule SE (PDF), Self-Employment Tax to figure your net earnings from self-employment.  Self-Employment tax consists of the Old-Age, Survivors, and Disability Insurance (social security) and the Hospital Insurance (Medicare) taxes. The Social Security Administration uses Schedule SE to figure your benefits under the social security system. See Publication 334, Tax Guide for Small Business.
Note: The Federal tax system is based on a pay-as-you-go plan. Tax is generally withheld from employees' wages or salary before they get it. However, tax is generally not withheld from self-employment income. Thus, you may be required to make estimated tax payments. Publication 505, Tax Withholding and Estimated Tax, provides information on making estimated tax payments.

Rev. date: 08/04/2012

My son is a newspaper carrier. I would like to know if this income is subject to Social Security and Medicare tax and if I must file a Schedule C for him.

Your son may be liable to pay into the Social Security and Medicare system by paying self-employment tax:

Special rules apply to services a person performs as a newspaper carrier or distributor. A person is a direct seller and treated as self-employed for federal tax purposes if he or she meets the following conditions:
Carriers or distributors (not including those who deliver or distribute to any point for subsequent delivery or distribution) and vendors (working under a buy-sell arrangement) who do not meet all of the above requirements and are under the age of 18 are generally not subject to self-employment tax.

Form 1040, Schedule SE (PDF), Self Employment Tax, must be filed if net earnings from self-employment are $400 or more.

Self-employed persons report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or the person may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business.

If you were self-employed, you can deduct one half of your self-employment tax and part of your health insurance premiums.

Rev. date: 08/04/2012

I received a Form 1099-MISC with an amount in box 7, (nonemployee compensation). What forms and schedules should be used to report income earned as an independent contractor?

Independent contractors report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship), or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net Profit from Business (Sole Proprietorship).

Rev. date: 08/04/2012

What, if any, quarterly forms must I file to report income as an independent contractor?

Because you generally will have no taxes withheld from your income, you may need to make quarterly estimated tax payments:
You need to be aware that there may be state and local requirements for estimated tax payments:

Rev. date: 08/04/2012

My child has joined AmeriCorps and has received an income statement. Are these payments taxable?

Yes. AmeriCorps Education Awards and living allowances are taxable in the year they are paid. If you receive an award you should receive a Form 1099-MISC.  The 1099-MISC will show your award dollar amount in box-3 Other Income, with no withholding.  Report these amounts on line 21 for Other Income on the Form 1040.
Visit the AmeriCorps website for more information on the Segal AmeriCorps Education Award programs.