Millions of taxpayers wear multiple hats. From full-time businesses to mini side hustles, it’s not uncommon for an employee to venture into the world of entrepreneurship. But does this complicate things when tax season arrives? The answer is usually yes. The tax experts at MileIQ want to help our readers file with confidence. Below are the answers to your most asked questions regarding a 1099 and W-2 filing.
Don’t panic if you have more than one tax form. In fact, having a 1099 and W2 is more common than you think. In this day and age, employees have the liberty to pick up side gigs when they feel like earning extra cash. A perfect example of this is part-time Uber or Lyft drivers. Many work a 9 to 5 job and spend their added free time offering rideshare services.
With a 1099 and W-2, you still file your taxes as you normally would. Either sit down with a qualified tax professional or E-file with a reputable tax preparation software. When you’re dealing with a W-2 and one or more 1099 forms, you want to choose the filing option that feels most comfortable. The last thing you want is a tax mistake to set you back from earning a deduction.
A taxpayer with a W-2 and 1099-NEC form should not file them separately. Since the IRS needs information from both forms to determine a refund, it’s best advised to include all reported income at once. Keep in mind, you will have to fill out Form 1040 as well. This tax form helps the IRS establish a clearer depiction of your total taxable income as an employee and independent contractor.
If you are new to the 1099 family, you’ll quickly learn it’s relatively easy to file taxes this way. Perhaps not as straightforward as a W-2 form, but that is why the tax experts at MileIQ are here to help. When you work as an independent contractor and are paid $600 or more during the year, you’ll be required to file a 1099-NEC, formerly called 1099-MISC form. What’s unique about a 1099 form is you don’t have to attach or upload a copy to your tax return. Just make sure you accurately report all income shown and no problems should arise.
Seems pretty simple, right? Well it gets better. As a 1099 worker, you can take a number of business deductions, including home office deductions, internet and phone bills, interest on loans, licensing fees and more. Then again, the best tax deduction comes from vehicle expenses, more specifically, a mileage deduction. With a mileage tracking app, 1099 workers can log miles driven for business and earn major savings on their tax return each year.
Ultimately, no. If you own a limited liability corporation (LLC), you must also list the profits you gain or losses you incur on an IRS Form 1040. A profit-making tax year will reflect directly on your return by including this amount with your taxable income. On the other hand, if your business experiences a loss, you must subtract this amount from your income. Given these requirements, you must file a IRS Schedule C, Profit or Loss From Business form with your tax return instead of 1099-NEC.