1099 Contractor Tax Obligations: What You Need to Know
What Is a 1099 Contractor?
A 1099 contractor (independent contractor) is someone who provides services to a business but is not classified as an employee. Instead of receiving a W-2, you receive a 1099-NEC form reporting your earnings.
Key Tax Differences: 1099 vs W-2
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Your Tax Obligations as a 1099 Contractor
1. Self-Employment Tax
You owe 15.3% SE tax on 92.35% of your net earnings:
2. Federal Income Tax
Your net earnings (minus the deductible half of SE tax) are subject to federal income tax at your marginal rate.
3. State Income Tax
Depending on your state, you may owe additional state income tax. States like Texas, Florida, and Nevada have no state income tax.
4. Quarterly Estimated Payments
You must pay estimated taxes quarterly to avoid penalties.
Top Deductions for 1099 Contractors
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