Hey BP! My name is Noah Simmons and I am new to the REI world. Currently I am subbing out my work as a contractor for real estate investors and with every job over about 500 bucks I've been paid through a 1099 rather than a W2 employee or just cash deal.
I’ve been setting aside money from each one for the end of the year (30% for each job). However, this is my first time working as a subcontractor, and I want to make sure I’m doing this right.
So is 30 percent of each job enough/too much? I keep records of my work and the pay. Is there anything else I need to be aware of? Also I have a full time job as well, so my taxes are going to be more complicated than in the past. I’ve done my taxes myself up till now, but bringing 1099’s into the mix with my w2 job is going to mix things up. Is it still doable to take care of my own taxes or should I see a cpa?
Take it to HR block person for answers unless you need a CPA.
@Noah T Simmons
You are correct - your tax return is more complicated than it was in the past.
Whether 30% is the proper amount to set aside from your contract work depends on several factors.
If you have a lot of expenses to generate the income; The gross amount is not taxed; only the net figure is taxed.
Furthermore, it also depends on what tax bracket you are in. The higher tax bracket; the more you should be setting aside.
Ultimately, the contract work is subject to federal income tax, state income tax and self-employment tax.
Luckily, you live in WA and there is no state income tax within the state.
Yeah, just the self employment portion(s/med) is 15.3%, since you have to pay “both sides”.....then add on your fed tax.....both on your net.
Ok. Thanks Gus for the advice!
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