w-9 tax form question ?
I have registered a business name and got insurance for doing small odd jobs now and then. I was sent a W-9 form for TIN by my bank. I work full time for a company and they pay all taxes from that but what I'm wondering is how this is all going to affect me. Since I only do a handful of odd jobs as under my own name am I going to be audited every year because i'm only claiming handful of jobs and the IRS is going to think Im cheating them ? How do I file since I work full time for a company, I can't file sole proprietor because 98% of my income is from an employer. This might be more trouble then it's worth.
Public Comments
- If you do odd jobs for a business and they pay you $600 or more they will send you a From 1099-MISC at the end of the year. They will also send a copy to the IRS. So the IRS expects you to report it. It may take them a while to write to you, but they will get around to it. So what you do is put your wages on line 7 of the 1040 as normal and then prepare a Schedule C for your odd jobs. If you own any tools or vehicles to do your odd jobs you will also have to do a Form 4562 to take a deduction for depreciation. Once you have your Schedule C done, do the Schedule SE. If your net income on the Schedule C is less than $433 you will only have to fill in a couple of lines. The results of the Schedules C & SE go onto the 1040. If you have to pay SE tax do not forget to take the deduction towards the bottom of page 1 on the 1040. As I see it, your choices are to report all of your income or to stop doing odd jobs for pay. If you get paid, do not report it and the IRS gets told about it, they will charge you interest and penalties. If it goes on for long enough before being stopped, the interest & penalties can be more than the total tax. If you do not like the idea of keeping books, contact several small CPA or EA firms. Most will give you a free consultation. Choose whoever you feel happiest with. At the very least, they will give you peace of mind. They may even spot some deductions you missed and actually save you some tax!
- A W-9 form is simply verification for your tax id number (so you are not required to have backup withholding taken) A W-9 is not to be filed with the IRS but sent back to the requester, and in this case the bank. "How do I file since I work full time for a company" Unless you are on payroll, you are not considered an employee in the eyes of the company you'd work for. You'd have to declare all payments made by the company to you on Schdule C in gross amounts.
- You file a schedule C or C-EZ (as sole proprietor) for the odd job income, and that info will flow a form 1040 - your income from your regular job goes on that same 1040.
