I don’t think she has done either. She told me that she was told that if she started saving towards her taxes and filed 1099, she wouldn’t have to pay. it’s a lot of money…what else can she do? And she doesn’t have w2 either. If she refiles with 1099, would I have to update it with the colleges?
SHE doesn’t file a 1099.
My guess is she would file a 1040 with Schedule C.
As has already been stated, it does not matter if she received 1099-Miscellaneous for her Nonemployee Income or not. It is still taxable and she needs to report it (probably on Schedule C of Form 1040).
How much are we talking here?
You ask ‘if she refiled…would I have to update it with the colleges’. So are you saying she already filed her 2014 tax return and you already reported on FAFSA that she earned zero dollars?
No, she filed 12k for cash income, just not 1099. So everythings fine, I just don’t know why she has to pay much out of that little income.
@ThePariah -
A lot of people forget that when they have self-employment income (the income the companies report with a 1099), they will owe not only federal income tax, but also self-employment tax. If you look at her Schedule C and her Schedule SE, you will find out what her self-employment tax comes to. Self-employment tax includes the taxes that both employees and employers pay into the social security and medicare systems. If you are self-employed, you are considered both an employer and and employee, so you are responsible for both parts. If you are an employee, you would pay half, and your employer would pay the other half.
SE tax is 15.3% of SE income, so if she didn’t have a lot of business expenses to reduce her income on Schedule C, then her SE tax alone on 12k would be about $1,800.
edited: Just saw annoyingdad’s post. He has the right figure for income of 12k.
Self employment tax(social security and medicare, both the employee and employer share) on $12k income would be about $1836. That may be why. It’s not the income tax that is that much, she shouldn’t be paying any income tax on $12k.
When you are an employee, the employer has to withhold federal, state and local income taxes and also social security and medicare taxes. The employer pays half of the socsec/med part and employee other half. At the end of year they are supposed to send you a W2.
When you are considered an independent contractor you should receive 1099 form for the amount paid to you. There are no taxes withheld and if you expect to owe tax you should make quarterly estimated payments.
Also you have to pay the whole amount of soc sec/medicare tax yourself.
So it might be better if your Mom was an employee.
Anyways, I expect she doesn’t have much taxable income for federal tax after a standard deduction and personal exemption for you and herself. But the self employment taxes (soc sec/medicare) like happymomof1 above said would be due.
Did someone help your Mom with the taxes? Is it just you and her in the family? Did she have any expenses for her job, supplies, mileage for driving to do her work?
Did she have the same job last year, did she owe money then?
She paid like 400 something last year.
.and she’s goes to an accountant to file her taxes. My mom files as head of household, and my father lives in another country but is dependent on my mother.
If she earned $12K and your dad doesn’t earn anything (?), she will owe the self-employment tax of around $1800 BUT she may also be eligible for the EITC (Earned Income Tax Credit) which would actually result in a refund for her after that SE tax is paid.
And any expenses she can document will make that SE tax lower and/or her EITC refund higher.
I assume you are dealing with this because your mom maybe doesn’t speak English well, but why isn’t the accountant advising you/her on this?
EITC requirements: http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers (maybe your dad makes her ineligible?)
If she is married and spouse lives in another country does she have to file married filing separate?
http://www.irs.gov/Individuals/EITC,-Earned-Income-Tax-Credit,-Questions-and-Answers
If she has to file married and separately, I don’t think she can get EIC.
She is filing HOH according to the OP. That suggests to me that OP’s dad and mom are not married. (or that OP’s mom is filing incorrectly)
They are married but physically separated(a bit worried about what colleges think about this), but her accountant suggests her to file that way…
The taxes are fine when they are filled that way right? (In terms of college aid)
Well HOH status is supposed to be for a single parent who is separated or divorced. The IRS definition of “separated” doesn’t necessarily mean “divorced” but it does speak to intent to be together again (couples separated for work reasons aren’t supposed to use it but I guess some do). That’s really between her and the IRS and not something I can comment on as a member of CC.
But if this accountant is advising her…is he the one who told her she didn’t have to declare income unless she got a 1099? And if he is advising her, and she can legally file as HOH, then she may be eligible for the EITC which as I said would generate a refund in this case. I’d have her ask him about it if the link I posted sounds like it might apply to her situation.
As far as YOU are concerned, her taxes should be filed as accurately as possible as soon as possible for maximum financial aid.
Yea she filed 12000 as cash income (cash income). I just don’t want them to give me less money since my mom files as hoh and is married.
I’ll ask her about eitc.
The mom would be “considered unmarried” for the purpose of HOH because the dad didn’t live in the home the last 6 months of the year and isn’t temporarily absent.
The quote is from the HOH section of Pub 501.
Yea that’s accurate but they’re still married.
If your dad isn’t coming back then HOH is fine as annoyingdad’s quote shows.
Anyway, none if it really affects your financial aid except that some schools, Profile schools, will also want your dad to fill out a non-custodial parent form. Do any of your schools require the CSS Profile?
The mother may not be a citizen or resident alien, so may not qualify. The accountant should know ALL of this, but it won’t hurt to nudge him, remind him of credits.
My mom is a permanent Resident, so she should qualify…anyways I just got an email saying that my fafsa was processed. Can I add more schools now? Also, I don’t think my dad should file thenoncustodial profile because he is my custodial parent too, I was told by CCers that.
My mom keeps insisting that her accountant said that if you don’t have 1099 and w2, you have to pay.