1099 issue

[Showtime]

I had a contract job for a company last year for about $10,000. I cut ties with this company because the owner was a scumbag. I would prefer not to contact them or deal with them. He doesn't have my social security number or address so I doubt that I will get a 1099 form. Can I still go ahead and file my taxes without the 1099 form? Plus did I screw myself because I think I needed to report this money quarterly last year? I am so lost. How much can I expect to pay on this money. I went on a tax filling site and it said that I would owe $300. This sounds too low.

 

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[Felix II]

First of all, the company HAS to send out 1099s. This is an IRS requirement, otherwise the IRS doesn't know how much you made and you could stiff them. If he doesn't send you a 1099 still be sure to pay what you owe (keep good records of your invoices) because even though he may not send you one, he will probably still report to the IRS. If you underpay you can almost guarantee you will get a letter from the IRS next year saying you owe X amount plus interest.

As far as how much you owe? On $10,000 I'd give a rough estimate of $2,500 (plus any state/local taxes). You'll owe at least 15.3% in self-employment tax and then regular federal income tax, so you are already looking at about 25%. Then you also have to pay state and local (but the self-employment tax is usually tax deductible).

As far as not filing quarterly, it is not very smart but you'll be okay. The penalties aren't that big. I think I got hit with about $60 one year for not paying enough (I made more than I expected).

Tip for the future, get an online account with the IRS and pay every time you get a 1099 payment. I also pay may state taxes to the IRS and then just pay the state from my federal refund. Some people will say this is stupid because that money could be in savings account earning interest. I'd argue that my time and peace of mind (e.g., I spend 5 minutes making a payment and not having to worry about keeping track of separate bank accounts or how much in my account is reserved for taxes, and then trying to square up the correct percentage every 3 months) are worth much more than the few dollars I'd earn on the money.

 

[Showtime]

Thanks Felix. You really put my mind at ease. I know this guy has to send me a 1099 but he most likely won't. Basically I am just going to go off of all the checks I have deposit and add those up.

Also on a separate note. I am planning on forming a single member LLC (I can't find anyone else to give them 2% for the liability protection). I know I would have to pay taxes quarterly when I pay myself, but would the LLC have to pay taxes quarterly as well or is this something that can be taken care of end of the year?

I understand that you have an account with the IRS. How easy is it and is this this something that I can do with a third party software such as turbo tax?