1099 Income and Schedule C

Sole proprietors and single-member LLC owners are required to report 1099 income and pay self-employment tax on the first $160,000 annual Self Employment Income. Becoming familiar with IRS guidance pertaining to recordkeeping and deductibility of business expenses can greatly reduce the tax burden of self-employment income which is taxed at more than 40% for incomes above $95,000 for single taxpayers.

1099 income is taxed differently than w-2 income. Business owners receiving 1099s need to implement and maintain a record keeping process in order to avoid paying thousands of dollars in unnecessary taxes. This meetup will cover the key aspects of separating business and personal expenses and keeping track of year-to-date income from self-employment activities so that deductible business expenses can be documented and accurately reported.

Note: filing a corporate election can reduce self-employment tax, however the additional cost of professional fees (separate tax return and state compliance requirements) and many hours of payroll set-up are often overlooked. The self-employment tax savings achieved via a corporate election often outweigh the additional professional fees and payroll compliance obligations for business owners that expect taxable income to consistently exceed $50,000 (after business expenses).