Author Topic: 1099 and W2 in the same year?  (Read 3487 times)

skyler

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1099 and W2 in the same year?
« on: February 03, 2015, 05:44:09 PM »
Question time, please help me figure this out:
I have been self employed (1099 contractor) for the past decade. I now have an offer to take a part time position, it will be W2, no retirement benefits, but good pay. This work will diminish significantly my available time I can "freelance" and thus my 1099 income (and my SEP contributions). I currently work from home and I am able to deduct my home office and car expenses.

Will I still be filing as "self employed" and be able to deduct my home office and car?
What other implications should I consider?

seattlecyclone

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Re: 1099 and W2 in the same year?
« Reply #1 on: February 03, 2015, 05:48:45 PM »
You will report your W-2 income on line 7 of your Form 1040.

You will continue to file the self-employment tax returns for the portion of your income that you earn from freelance work. Just as now, you will be able to deduct any legitimate self-employment expenses from your self-employment income. That income will then be added on to your W-2 income on your tax return to compute your overall tax amount.

zinethstache

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Re: 1099 and W2 in the same year?
« Reply #2 on: February 03, 2015, 05:53:54 PM »
Consulting a tax professional is the only sure answer. I have received a W-2 and 1099s for years. in my case the 1099s are entered under business income forms (one per business entity so multiple Schedule Cs). So I suspect you will do like I do, your W-2 earnings on the main 1040 (no longer use the 1040SE form), you will have business income now versus self employed income and on that business form you will fill out the home business office space. Turbo tax does a great job at all this btw, though I stopped using it when we added rentals to the mix. I am no professional so there could possibly be a way to reverse what I've always done, use the 1040SE and some form for W-2 income...

Hope this helps!

red7

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Re: 1099 and W2 in the same year?
« Reply #3 on: February 03, 2015, 05:57:21 PM »
As long as you still have some income from your 1099, you will still file a Schedule C for your self-employment income and can make all of the normal deductions, SEP contributions, etc. that are allowable based on that income (and ONLY that income).

You would just report your W2 income on your 1040 in the appropriate place.

I have used a part-time W2 job before as a tax payment vehicle, so I wouldn't have to deal with quarterly payments. I had them hold out way more taxes than I would need for the W2 wages in order to cover the taxes I would owe for my self-employment income. It can be useful. :)

Of course, that part-time job also came with some really nice benefits. I'm not sure I would do it for W2 with no benefits, unless there was a HUGE difference between what they would pay me and what I pay myself as a SE person.

Edited to add: Also agree on TurboTax. They really do a good job with the whole SE + W2 income thing -- but you do pay for those capabilities.