Author Topic: 1099-misc income  (Read 195 times)

Bfels

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1099-misc income
« on: August 12, 2017, 11:19:05 AM »
I am a commercial fisherman in the summer who receives income via a 1099-misc form.  I also am a teacher the rest of the year so I pay regular taxes at a withholding rate of 2.7%.  I have never paid estimated taxes earlier in the year and have rather just filled out my taxes a couple days prior, if not the day of, of tax day.  My W-2 always results in me getting a refund (I am single but will be getting married this year) but once I put in my 1099 I always find myself owing money, sometimes money that I don't still have.  Does anyone have experience with paying estimated taxes or have recommendations on changing my withholding rate %.  I'm asking because I made a large sum of money fishing this year and am trying to decide the best route to go in regards with the taxes I will have to pay on it.  Thanks!

dandarc

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Re: 1099-misc income
« Reply #1 on: August 12, 2017, 11:37:08 AM »
I'm not sure if there are special rules for fishermen, but in general, there are at least 2 ways to deal with this:

1) Adjust withholding at your day-job.  Once your fishing income is in and known, you can make a good estimate of your taxes owed, since your teaching salary is much more predictable.  So each year, you'd work up an estimate of your taxes, then taking into account anything you've already had withheld, adjust your W-4 at work to reflect that over however many paychecks are left before the end of the year.  This has the benefit that the IRS treats any money withheld by your employer as having come in evenly over the course of the tax year.

2) Pay estimated tax quarterly (may be annually for fisherman - that's where a real accountant who deals with fishing income regularly could be very helpful).  This may be necessary, even if you do #1 above - it is possible to have made so much money fishing, that your salary for the last few months of the year isn't enough to pay the taxes owed, once they are known.

On your fishing income, you probably owe a minimum of about 14% - that covers self-employment tax.  Income, or any state taxes would be on top of that.
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