Glenn Woods’ Top Tips for 1099 Tax Filers

You know I hate bureaucracy for so many reasons. Seriously, I'm allergic to paperwork. One of the biggest reasons is that it can be confusing.

Besides the radio show, I come out with the occasional book, and I'm a media consultant, and a public speaker. I have to track all of that and claim it on my taxes. That can be a lot of work. It's very time consuming.

Filing taxes can be a hassle even if you just have a W-2 and a mortgage payment, but it's WAY more complicated when you add in other income streams, such as working as an independent contractor or having rental properties.

In fact, some residents get confused when they receive a 1099 because they don't realize what it is and how it affects their income taxes. Some also get a little confused about what business expenses they can deduct and how to document them.

I turned to my friend Gabriel Pina at Pina Business Services to help make sense of it:

1) What is a 1099? If you're a freelancer or independent contractor, expect a 1099-MISC from everyone who pays you $600 or more during 2019, according to Turbo Tax. You'll also receive 1099s for interest and dividend income, proceeds from selling real estate, any unemployment benefits you received, etc.

Don't just ignore them. "Not reporting the income may trigger an audit, which could result in paying back taxes, plus interest and penalties," according to Quickbooks.

2) What extra responsibilities do I have as an independent contractor? Companies don't deduct Social Security and Medicare taxes from payments to independent contractors, so you'll need to pay those with your income taxes. (You'll pay 15.3 percent and deduct half of that as a business expense, according to Quickbooks.)

3) What about deducting business expenses? This gets muddy really quickly. You can deduct business expenses for which you have receipts, but what if you use your car and cellphone for both business and personal uses? You can deduct 58 cents per mile on vehicle use for businesses, and you can prorate expenses that are predominantly business expenses (IE, if 80 percent of your cellphone use is business-related, you can deduct 80 percent of your cellphone bill), according to Quickbooks.

Yeah, that gave me a headache just thinking about it. If you're self-employed or looking at a bunch of 1099s, I'd suggest scheduling a consultation with Pina Business Services, so Gabe and his staff can look at your specific situation. Not only can they help you file your taxes for 2019, but they can ensure you're keeping the right records to make your 2020 taxes easier.

Just give them a call at (307) 369-2708 or visit pinabiz.com to get started. Tell 'em I sent you!