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Started By
Message
Wife started a new job this year will be 1099
Posted on 1/30/25 at 10:56 am
Posted on 1/30/25 at 10:56 am
They plan to change it to a normal W-2 for next year, but anyways I don't have any experience with this. I was told I may need to pay quarterly taxes for this?
Anything else I should be aware of, and any tax advantages?
Thanks
Anything else I should be aware of, and any tax advantages?
Thanks
12
Posted on 1/30/25 at 10:58 am to PistolPete45
quote:
and any tax advantages?
She can write off some expenses
Posted on 1/30/25 at 11:02 am to PistolPete45
quote:
They plan to change it to a normal W-2 for next year
This sounds fishy
Posted on 1/30/25 at 11:18 am to PistolPete45
Get ready to pay both sides of SS and medicare as well
Posted on 1/30/25 at 11:28 am to thelawnwranglers
quote:
Get ready to pay both sides of SS and medicare as well
but get half the SS back as a deduction
Posted on 1/30/25 at 11:54 am to PistolPete45
Different industries can have some different rules on what all expenses are allowed to be deducted, but definitely look into that for whatever she is doing and track everything you can and deduct as much as possible 
This post was edited on 1/30/25 at 11:56 am
Posted on 1/30/25 at 12:29 pm to PistolPete45
SEP-IRA to reduce tax bill
Posted on 1/30/25 at 4:05 pm to gpburdell
quote:
SEP-IRA to reduce tax bill
Based on this it doesn’t sound like she is eligible:
quote:
To be eligible for a Simplified Employee Pension (SEP) IRA, an employee must meet the following requirements: Be at least 21 years old Have worked for the business for at least three of the last five years Have received at least a certain amount of compensation from the business in the previous year
Posted on 1/30/25 at 4:08 pm to Mingo Was His NameO
quote:
This sounds fishy
I was skeptical as well, but she is working for the state in a new role that they haven’t built out yet, and this is why they started as 1099. If this was a private company I would have told her hell no.
Posted on 1/30/25 at 4:15 pm to PistolPete45
Be aware then June payment comes quicker than it should. I always hate that June quarterly payment being two months after the April payment.
Posted on 1/30/25 at 9:35 pm to PistolPete45
quote:
Based on this it doesn’t sound like she is eligible:
https://www.irs.gov/retirement-plans/retirement-plans-faqs-regarding-seps
IRS page says this (part in bold):
quote:
Employees must be included in the SEP plan if they have:
-attained age 21
-worked for your business in at least 3 of the last 5 years;
-received at least $750 in 2022; $650 in 2021 and 2022; $600 in compensation (in 2016 - 2020) from your business for the year.
Your plan may use less restrictive requirements, for example age 18 or three months of service, to determine which employees are eligible.
I was a self employed 1099 contractor for 18 months about 15 years ago. I maxed out a SEP IRA back then. Possible rules have changed but it seems it's still valid.
Posted on 1/30/25 at 10:42 pm to Jmcc64
quote:
but get half the SS back as a deduction
yes. employer portion of payroll tax is a deduction for my corporation and will be for a 1099 sole prop as well like the OP.
Posted on 1/30/25 at 10:49 pm to PistolPete45
Posted on 1/31/25 at 6:06 am to PistolPete45
If it’s just for a year, set aside 25 or 30% of the gross to cover tax. In my experience, these small consulting type jobs (assuming that’s what it is) are light on deductible expenses and/or the expenses just don’t add up to make much difference.
If she’s traveling to clients in her vehicle, track mileage. If she’s using her cell phone, deduct a %. Deduct things like licenses, continuing ed, office supplies, dues and subs, business meals. Can also take business use of home if she has a home office. All of this should go on a Schedule C, btw.
I don’t see why you’d need to pay quarterly estimates if it’s a one year deal. I also don’t know your AGI, which could affect that.
Edit: it also depends on your W2 withholdings. If you’ve traditionally withheld the max and get a refund, you may have enough to cover her SE income. If not, you could consider maxing your withholdings for a year instead of paying estimates. This is really situation specific if you have a CPA, talk to them.
If she’s traveling to clients in her vehicle, track mileage. If she’s using her cell phone, deduct a %. Deduct things like licenses, continuing ed, office supplies, dues and subs, business meals. Can also take business use of home if she has a home office. All of this should go on a Schedule C, btw.
I don’t see why you’d need to pay quarterly estimates if it’s a one year deal. I also don’t know your AGI, which could affect that.
Edit: it also depends on your W2 withholdings. If you’ve traditionally withheld the max and get a refund, you may have enough to cover her SE income. If not, you could consider maxing your withholdings for a year instead of paying estimates. This is really situation specific if you have a CPA, talk to them.
This post was edited on 1/31/25 at 6:15 am
Posted on 1/31/25 at 7:10 am to PistolPete45
quote:
I was skeptical as well, but she is working for the state in a new role that they haven’t built out yet, and this is why they started as 1099. If this was a private company I would have told her hell no.
Starting her out as a 1099 for a W2 role doesn't make any sense unless this is very specialized and high compensation.
Is she working for the state of Louisiana or working for a contractor? is she going to be working 40 hours per week?
With the information you've told us, her employer is acting illegally. It doesn't matter if it's the state.
Posted on 1/31/25 at 7:29 am to gpburdell
quote:
SEP-IRA to reduce tax bill
nope. solo401k is better
Posted on 1/31/25 at 9:45 am to PistolPete45
quote:
I was told I may need to pay quarterly taxes for this?
Not "may," you will. If you try to pay all at once, you will get penalized a not insignificant amount. You will have to file a 1040ES each quarter. My ex was paid monthly, and we kept the first paycheck of each quarter to pay for the 1040ES. There is a calculator on that page, and here are the dates you need to pay for last year:
quote:
1st payment ................. April 15, 2024
2nd payment ................ June 17, 2024
3rd payment ................. Sept. 16, 2024
4th payment ................. Jan. 15, 2025*
Your first payment due is a little over 60 days away.
Posted on 1/31/25 at 10:51 am to LemmyLives
not surprisingly, my wife missed her tax payment on 1/15... anyone have thoughts if we should wait until tax time, or go ahead and make the payment?
Posted on 1/31/25 at 11:10 am to CheesyF
Wait, if she started the job in 2025, her payments start in April, with the final payment in January of 2026. If she got a 1099 from 2024, you're correct. ETA: It's critical that in the subject line on the check, you CLEARLY indicate what TAX YEAR the check needs to be applied to. That bit me to the tune of $14k the year we got married.
At any rate, just start sending checks at (or before) the next payment date. As long as you keep up with the amount (if she owes $10k over the year, instead of making $2500/qtr payments, she makes 3 $3,333 payments, the penalty impact should be small enough where you can still buy groceries, but enough to remind you not to dally next year.)
And if you're filing taxes jointly,
Scan everything in terms of checks, payment stubs, etc. If you get put in the position of trying to go back through a year's worth of bank statements looking for IRS payments, well, it's a pain in the arse.
I am not a lawyer or an accountant, just dealt with this issue for almost a decade. I would advise finding an accountant that can help with self employment deductions. Somehow my ex-wife's tax burden is under 15%, even though she makes six figures. But don't start asking around until May, every accountant is the US is getting crushed until after April 15th.
At any rate, just start sending checks at (or before) the next payment date. As long as you keep up with the amount (if she owes $10k over the year, instead of making $2500/qtr payments, she makes 3 $3,333 payments, the penalty impact should be small enough where you can still buy groceries, but enough to remind you not to dally next year.)
And if you're filing taxes jointly,
quote:needs to change in your mind to "we missed our tax payment." Don't worry, this kind of crap happens all the time. I got divorced in the middle of a tax year, asked my ex to look for the Q3 duplicate check (copy) payment to the IRS, and she couldn't find it, or didn't look for it. I stroked a 5 figure check. Then, five months later the IRS said we'd overpaid and gave me the entire check back.
my wife missed her tax payment
Scan everything in terms of checks, payment stubs, etc. If you get put in the position of trying to go back through a year's worth of bank statements looking for IRS payments, well, it's a pain in the arse.
I am not a lawyer or an accountant, just dealt with this issue for almost a decade. I would advise finding an accountant that can help with self employment deductions. Somehow my ex-wife's tax burden is under 15%, even though she makes six figures. But don't start asking around until May, every accountant is the US is getting crushed until after April 15th.
This post was edited on 1/31/25 at 11:12 am
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