Today TaxMama® hears from Trina in the Tax Quips Forum who wasn’t an employee. “I started working for a newspaper company over the summer of 2011, delivering papers to homes using my own vehicle. The company did give me company checks, but they did not take any taxes out. I believe they called their employees “independent contractors.” How do I file my taxes, since there has not been anything taken out?”
Hi Trina,
Yes, I remember seeing those ads in the newspaper about making SO MUCH money per month, early in the morning, delivering newspapers. It does sound tempting, doesn’t it? You get your work out of the way early – then have the whole day to do a regular job, or your studies, or take care of your children. Sigh…it doesn’t really work out that way, does it?
Did you also have to collect the subscription fees? My husband used to have to do that as a young boy. It is common in the newspaper industry to hire delivery folks as independent contractors.
OK, here’s how you report the income, in 5 easy steps.
1) Report the amount on that 1099-MISC on Schedule C, on the long version of the Form 1040.
2) If you tracked the mileage, total up the miles from January – June 30; and from July 1 – December 31, 2011, or the corresponding time period when you worked this job.
a. The miles before June 30 are worth 51 cents per mile x the miles you drove.
b. The miles from July 1st onward are worth 55.5 cents per mile x the miles you drove.
c. Report the total mileage expense on line 9 of the Schedule C.
3) If you have other expenses, like office supplies, other supplies, postage, telephone, etc. you can deduct those as well.
4) Since you were working from home, it’s possible that you may be entitled to office in home deductions. Maybe not, if you didn’t have a specific area where you were working.
5) Once you arrive a net profit, you will be paying self-employment taxes on that profit at 13.3% (only for 2011, it’s usually 15.3% in other years). IRS Publication 334 will provide more information about business expenses.
If you’ve never done this before, perhaps, for this year, you should have a tax pro help you. There are a lot of deductions you might be entitled to use – perhaps even to wipe out your profits.
And remember, you can find answers to all kinds of questions about being in business and other tax issues, free. Where? Where else? At www.TaxMama.com.
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