Taxpayer asks:
I am a driver for a FedEx contractor, and I just recieved my 1099-misc form from my boss(the contractor) and I have no clue as to what to do from here. In the past, my jobs were paid by hourly wage and I received a W-2 for those. This is totally new to me, and I need to know what information I need in order to report my income.
Taxgirl says:
I have two answers for you, actually.
The first is my generic 1099 answer. If you receive a 1099, you would report that in one of two places on your tax return. If the money was generated from a hobby, you would report it as “other income” on your federal income tax return. If the funds were generated from self-employment (i.e. your own business) as it sounds like yours is, you would report the information as stated on the 1099 on your Schedule C.
For more information on hobby and loss rules, see my prior post about deductions and my guest post on Problogger.
My second answer is to make sure it’s appropriate that you receive a 1099. This is not a determination that is made by the payor – it is a matter of law. It sometimes feels like a good idea to receive a 1099 but keep in mind that you might be missing out on benefits such as health care and stock options that you would otherwise be entitled to as an employee; also keep in mind that you will have to pay self-employment tax on your wages which means you pay the entire Social Security and Medicaid remittances. When you are classified as an employee, your employer is responsible for paying one-half of those taxes.
Since you mentioned that you are a driver for a FedEx contractor, it raised a bit of a red flag with me. FedEx is in the midst of a lot of litigation right now concerning drivers and potential misclassifications of employees as independent contractors. I would suggest that you contact a tax professional to discuss your circumstances and make sure that you’re being classified properly.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
What if the IRS says you were 1099 but you never received a copy and didn’t file any tax return on the reported money. Then some seven yrs later they say you owe them tax and penalties, but your at a loss because you don’t know what they are talking about or how they figured your tax (meaning status ie. single, married filing joint…).
Since I don’t have a clue of what they are doing, I have no idea what to do about what they are doing.