<p>I tried to help my daughter do her taxes last night - we're both SO confused!! She's in Tennessee; I'm in Oklahoma, so we were trying to do TurboTax together online. Here's the problem:</p>
<p>Last summer we lived in Texas. She worked on commission only (no taxes were taken out of her pay at all), selling the famous CUTCO knives and making about $2300. She began her freshman year in TN, and worked, making about $1500, taxes were taken out (around $75.00 worth). So, that's a rough $3800, but only $75.00 paid in Fed. taxes.</p>
<p>If you look at the fact that she's a dependent making less than $5350, she shouldn't have to file, except to recoup the $75 (assuming any Fed. tax that should have been paid on the commission would be refunded to her anyway). She won't be getting the rebate (and sadly, I won't get it for her either), so does she need to file?? TurboTax made it look like she should be owning her own business and they did not take the dependent status into account. She kept NO records of the millions of miles she drove, or the gas she bought, etc., etc...so business deductions are pretty much out of the question.
As far as state taxes go, Texas has no income tax, and Tennessee looks at her as being a resident of Oklahoma, since that's where I live, so no state forms need to be filed.</p>
<p>So...should she file? She's fine with NOT filing (just to get the $75 back) if it means less headaches. But does she HAVE TO file because of the commission 1099-Misc. pay?? Could she just lump the commission pay in with "wages, salaries, etc.," and do it simply? We'd probably have to use a different e-file, because TurboTax has you list every bit of information about the payor. </p>
<p>Does 1099 Misc. mean that she was self-employed? Typically 1099 Misc. is the W-2 for self-employed. I'd run the TurboTax just to see if she owes any other tax besides income tax.</p>
<p>We did...it just made her owe about $230 in Federal taxes...which showed me that it just wasn't taking her single, dependent status into account.</p>
<p>shankins - I'm not an accountant either, but I'd wager that if you spent an hour and $250 with one that you'd be getting your daughter's $75 back. And Uncle Sam isn't interested in discouraging low-paid work. So there's probably a legal way to do it. [I know how I'd do it, but my method might not be right for you and your daughter.]</p>
<p>It may be that the 1099 funds on Turbo Tax are showing you need to pay 15% FICA (self-employment tax), and the $75 is part of that $345 owed.</p>
<p>Any one who is self employed gets to pay both the employee and employer halves of the FICA that employers take out of ones paycheck.</p>
<p>I am guessing some tough self-employment lessons here, as she should have tracked her mileage and her gas and any other costs to reduce her income. Did she buy gas on a CC? Can it be recreated? Does she have a calendar showing her appointments, can she tell where she went and when and recreate the mileage deduction?</p>
<p>...any appointment logs have been thrown away in preparing for my move to OK and hers to college in TN. We could sort of approximate the miles driven over the summer (excluding the drive from home to the office, and back again in the afternoon) and we could approximate the gasoline costs, but nothing firm. I remember asking her about taxes and all when she first got that job...her answer was that they would help everyone when the time came. Well, maybe so, but most of them are far flung now!
We did enter the gas costs (on TurboTax) as a business deduction, but it ignored them, saying that the Standard Deduction was higher. So, she checked that and it was rejected since she hadn't made enough money...aargh.</p>
<p>1099 means she's an independent contractor. Go back over last years bills and reciepts. Mileage is one option, actual gas and automotive repair is another choice if you don't keep mileage records. Postage, phone bills..etc. Look at what was spent to make the money. </p>
<p>You may also have to file with the state's department of revenue, even if the amount owed is $0. </p>
<p>If you're not sure about how to do things. File an extension and take the time to review. My guess is she should be able to find enough expenses for things to even out and recover taxes paid.</p>
<p>If she wants to deduct the cost of gas/mileage (and she should), she needs to file Schedule C, which is for small business/self-employment profit. (Yeah, nothing's easy when it comes to taxes!)</p>
<p>...even if she falls below the minimum for a dependent AND she's willing to let the $75 go to forego the hassle?
If so, I see where this is going....I will file for her and tell her to never work contract labor again!!</p>
<p>Of course I say this...because I just finished mine and don't want more headaches...I had the year of the great deductions/credits (job and moving expenses, education credits, medical expenses, mortgage interest, etc., etc.) and did not make enough money last year to use ANY of it (isn't divorce just a wonderful thing??) Side note for myself...I know that I can carry forward some of the $1000s of dollars worth of stuff donated to Goodwill (and I used TurboTax's evaluator...moved from 2050sf. down to 800sf). Are there other deductions/credits that I may carry forward as well?</p>
<p>First, you do need to file a tax return if you have self-employment income of $600 or more. When she received a 1099 from Cutco, she files schedule C as a self-employed individual.</p>
<p>Secondly, she can then take all of her business deductions against her income before she pays any tax. This includes things like automobile ( 48.5 cents per mile last year, ( or actual expenses if she kept a good tax organizer for her automobile mileage and expenses), entertainment ( if she has the right documentation), advertising, marketing, cost of goods. phone calls for business, and samples etc. Any net income left over is what she will pay tax on.</p>
<p>Third, although she probably won't pay much federal income tax due to her deductions and standard deductions,which can be used against wages and self-employment income;however, she will probably have to pay some social security of 15.2% on her net taxable income (computed before the standard deduction and exemptions kick in). </p>
<p>Can Cutco provide a record of her appointments from their "system" Any computer records there?</p>
<p>If I were her, i would give up the $75 if I could avoid the rest, but the problem is the 1099 means she must file, so you gotta do, so, determine the best way to get the most legal deductions you can, as tax guy lists.</p>
<p>Son had a 1099 misc. for a job where taxes were not taken out. Had another job where taxes were. When he filed he owed money to the IRS for those non paid taxes from the 1099 misc. There was no way out (he was making less than the minimum too but still had to file) and I even called the IRS helpline to be sure. I suggest you try calling them as well, but I don't think your daughter will be able to get out of paying. Good luck</p>
<p>my head is spinning. Ok; I think she'll probably end up filing a 1040 with Schedule C. I'm going to contact CUTCO to see if they have any sort of record for her, or if it was all hers to keep...thanks for the help.</p>
<p>The "taxes" she owes are probably social security taxes. They should be listed as "other taxes owed" on the turbo tax form. This is because she made some self employed monies. You send the check with the tax return to the IRS..just the same way you would do if you were sending a tax payment for income taxes. They will know that you owe no income tax and from your return will send this to SS.</p>
<p>DS had to do the same thing....1099 misc is for self employed and even though below the threshold of earnings, you still have to contribute to SS for every $1000 earned.</p>
<p>She can file the 1040 and schedule C using the FREE FILE on the IRS website. Just get there and look on the left for "freefile". From there, you get to choose the vendor...DS chose Turbotax and filed free using it (regular 1040 form with schedule C included). He is also self employed. He did it himself with no difficulty at all...said it was VERY easy.</p>
<p>Haha! Find my thread in the cafe entitled "senioritis... again". Just went through this last weekend.</p>
<p>Daughter received a 1099-Misc for $4515 for self-employment as a 'consultant' in 2007. What we did, and I will run this past our accountant when we see him next week, is fill out Schedule C-EZ and Schedule SE, then completed a 1040. Between federal and state, she had to pay just over $800, and is still not happy with me because I won't give her the money to pay it. Since my H and I have never been self-employed, we'd never had to deal with this, and it took at least a couple of hours to figure it all out. My daughter did not have any expenses to deduct, though. She did all her work from her computer.</p>