Individuals can estimate 1099 taxes by considering all payments received during a given period, and then applying the relevant Social Security and Medicare taxes, notes TurboTax. The total tax amount based on 1099 income is reported on Schedule SE, as of 2015.Continue Reading
A person receiving a form 1099 is usually an independent contractor, notes the official Internal Revenue Service website. The person issuing the 1099 does not withhold any amount for tax, therefore it is up to the recipient to estimate and account for these items. If the recipient, or taxpayer, has a specific trade or business, this 1099 income is reported on Schedule C. The 1099 taxes, or self-employment taxes, are then calculated based on the profit shown on Schedule C. If the taxpayer does not have a trade or business, the 1099 income is reported on Form 1040.
Any 1099 taxes should be paid quarterly to avoid a significant liability at the end of the period, as instructed by the Internal Revenue Service. These 1099 taxes include Social Security and Medicare, and originate based on the Federal Insurance Contribution Act, as listed by the Internal Revenue Service. The Social Security tax has a wage-base limitation, meaning that the tax is only applied up to a certain income figure. Topic 751, issued by the Internal Revenue Service, contains more information on these items and should be reviewed prior to completion of a tax return.Learn more about Income Tax