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Message
Question about consulting / contract work
Posted on 10/9/13 at 2:18 pm
Posted on 10/9/13 at 2:18 pm
A friend of mine has a consulting contract for a company we both previously worked for. They have an event coming up he is unable to support and has asked me to fill in for him.
It would be a one day gig and I do not expect to do any other work like this this year, My fee will be $650 as an independant contractor to his company that holds the contract. (he is the only employee)
I know I will have to account for the money come tax time as he will not be doing any withholding. But can someone walk me through what I will need to do and what documentation I will need for the IRS come tax time?
Besides regular income tax, I will also have to pay SS / unemployment?
I should be able to deduct mileage / meals as exspenses correct? Meaning notate mileage and keep any reciepts, anything else?
If this goes well, I may have opportunity to step in and do this once or twice a quarter next year. Would that change anything as far as the questions above?
It would be a one day gig and I do not expect to do any other work like this this year, My fee will be $650 as an independant contractor to his company that holds the contract. (he is the only employee)
I know I will have to account for the money come tax time as he will not be doing any withholding. But can someone walk me through what I will need to do and what documentation I will need for the IRS come tax time?
Besides regular income tax, I will also have to pay SS / unemployment?
I should be able to deduct mileage / meals as exspenses correct? Meaning notate mileage and keep any reciepts, anything else?
If this goes well, I may have opportunity to step in and do this once or twice a quarter next year. Would that change anything as far as the questions above?
2
Posted on 10/9/13 at 2:23 pm to Chris4x4gill2
Have him pay you cash and don't sweat such a small amount. 
Posted on 10/9/13 at 2:25 pm to ThatsAFactJack
Yep. I wouldn't report that
Posted on 10/9/13 at 2:27 pm to I Love Bama
That was my initial thought, but if he shows it as an exspense on his side, will it cause trouble if I dont claim it?
Posted on 10/9/13 at 2:30 pm to Chris4x4gill2
quote:If your friend follows proper procedure, he will issue you a 1099-Misc in January and you will claim that income on an 1040, Schedule C as self-employment income when you file your 1040 next year. He will send a copy of the 1099-Misc to the IRS and they will look for you to claim the income on your tax return.
what documentation I will need for the IRS come tax time?
You will be responsible for paying both the employee and employer share of payroll taxes in addition to income taxes on the $650.
On the mileage and meals questions, wait for Poodlebrain to teach us.
Posted on 10/9/13 at 2:31 pm to Chris4x4gill2
quote:Likely, yes. And definitely yes if he issues you a 1099-Misc.
but if he shows it as an exspense on his side, will it cause trouble if I dont claim it?
Posted on 10/9/13 at 2:33 pm to LSURussian
They'll give him a W9 unless they're stupid.
Posted on 10/9/13 at 2:39 pm to econ85
Which he will complete and give back to his buddy he's working for.
Posted on 10/9/13 at 2:45 pm to LSURussian
So to keep it all above board, I need to give him a completed W9. He will issue me a 1099-Misc that I will use to report as Self Employed income on my taxes next year.
Will I be saving myself effort and money in the long run by having him only pay me $599 since a 1099 is not required under $600?
Will I be saving myself effort and money in the long run by having him only pay me $599 since a 1099 is not required under $600?
Posted on 10/9/13 at 2:54 pm to Chris4x4gill2
I've worked as an independent contractor for years. I've always reported all of my income even if the primary contractor doesn't give me a 1099 just because I don't want to worry about it.
So that's more of a personal decision on your part.
So that's more of a personal decision on your part.
Posted on 10/9/13 at 3:06 pm to Chris4x4gill2
Yep. Cash is king.
Posted on 10/9/13 at 4:38 pm to Chris4x4gill2
quote:
Will I be saving myself effort and money in the long run by having him only pay me $599 since a 1099 is not required under $600?
I strongly suspect yes, especially if it's a cash deal. Given that you'll be saving yourself and your buddy some work ask him to buy you a few cases of beer or steaks on the side to make up the difference. If a 1099 is never generated the only way anything will happen is if you're audited and that is very very very unlikely. Even then we aren't talking about massive penalties.
Poodle is a practicing CPA and probably can't agree with the above for professional ethical reasons, but I doubt many CPA's would disagree privately over a glass of beer. Of course, for you not to pay the income tax anyway would still be illegal but that's up to you.
This post was edited on 10/9/13 at 4:41 pm
Posted on 10/10/13 at 6:47 am to Chris4x4gill2
You can do turbo tax online and it will walk you through the steps if you end up getting the 1099 . Very easy.
Posted on 10/10/13 at 7:44 am to skidry
Posted on 10/15/13 at 1:19 pm to Chris4x4gill2
It looks like I will be getting additional work sooner than expected. We will definately be doing the 1099.
What tips can you guys give me on what records I need to be keeping and allowable deductions? Is there any good reference material online? or just wade through the IRS handbooks?
What tips can you guys give me on what records I need to be keeping and allowable deductions? Is there any good reference material online? or just wade through the IRS handbooks?
Posted on 10/15/13 at 2:03 pm to Chris4x4gill2
My consulting fee is $200 per hour to answer your questions on taxation of consulting work. You wanna just paypal me?
Posted on 10/15/13 at 2:48 pm to Broke
I'm evidently not charging enough. Can I claim it as an exspense?
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