How do I begin the process for filing taxes as an independent contractor? 3 Answers as of April 27, 2011

I have transitioned from a full time on salary employee to a contracted part time employee. What is the process for tax filing with a 1099?

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Steven J. Fromm
Steven J. Fromm | Steven J. Fromm & Associates, P.C.
You need to set up an estimated tax quarterly payment program. Basically you need to estimate your annual income to report on Schedule C and estimate both your income tax and social security taxes for the year.

In the alternative, you can use the prior year tax safe harbor in making estimated tax payments. For example if your total tax liability for 2010 for $7,000, in most cases, your withholding and estimates need to equal that amount. So if you expect your withholding for 2011 to be $1,000, then you need your estimated taxes to total $6,000, with $1,500 is to be paid on April 15, June 15, September 15 and January 15.

Note, that if your income is above a certain amount in 2010 you may have to pay in 110 percent of prior year tax. For more information, look at the Form 2210 instructions as they give you some guidelines on making these computations.
Answer Applies to: Pennsylvania
Replied: 4/27/2011
Meyer & Yee, LLP
Meyer & Yee, LLP | Kent W. Meyer
You would file an entity return or a schedule C sole proprietor.
Answer Applies to: California
Replied: 4/27/2011
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