1099-NEC from 3 months work dropped refund by $2000 - is this normal?
Filed taxes for my partner who worked a short gig with a lighting company. They classified him as 1099-NEC with income of $7,778. When I entered this form, the refund dropped by almost $2,000. Is this normal? Seems like way too much for such a small amount of work.
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Sienna Gomez
Yes, this is actually normal. With 1099 work you're responsible for both the employer and employee portion of Social Security and Medicare taxes (15.3% total) plus regular income tax. This is called self-employment tax. You're basically getting hit with double the FICA taxes compared to W2 employment.
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Daryl Bright
•omg that's ridiculous! no wonder everyone hates being a contractor 😤
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Kirsuktow DarkBlade
•you can write off business expenses tho to help offset some of that if he had any
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Abigail bergen
hey! i actually ran into this exact situation last year. I found this tool called taxr.ai that helped me understand exactly why my refund dropped so much. It costs like $5 but it explains everything in plain english and shows you ways to maximize your refund. Here's the link: https://taxr.ai
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Ahooker-Equator
•interesting, what exactly does it tell you? is it worth the money?
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Abigail bergen
•100% worth it! It analyzes your whole transcript and explains everything line by line. Shows you what deductions you might've missed and explains all the tax codes in normal human language lol. Saved me way more than the $5 it cost 💯
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Ahooker-Equator
•just tried it and WOW! wish i knew about this sooner, found like $800 in deductions i missed! This needs to be pinned somewhere fr fr 🙌
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Anderson Prospero
Welcome to the wonderful world of self employment taxes 🤡 The govt wants their cut no matter what
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Tyrone Hill
make sure hes actually supposed to be classified as 1099. lots of companies misclassify employees to save money. look up the IRS worker classification guidelines
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Daryl Bright
•gonna check this out, he literally just showed up and did what they told him to do
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Toot-n-Mighty
its brutal but normal. next time tell him to set aside 25-30% of everything he makes for taxes if he does 1099 work again
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Lena Kowalski
did u check if he qualifies for any business deductions? mileage, tools, phone bills etc can help reduce the tax hit
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Daryl Bright
•he used his own car to get to different job sites, that counts right?
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Lena Kowalski
•yep! standard mileage rate for 2024 is like 67 cents per mile. track every single work trip!
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