I want to register with the IRS as an independent IT contractor of sorts? I would essentially have to get an EIN as my few little clients require it for auditing purposes. My question is, if I intend to make less than 10k with this small business venture, what can I expect in relation to how much I’ll be taxed?
Also any suggestions to help me out as a start this venture would be awesome. Thanks in advance!
Judy
March 12, 2010 at 1:40 am
If that’s your only income, and you are not a dependent, your income tax will be very low, around $105 on $10,000. If you have other income, your income tax will depend on your total income for the year, filing status, and deductions.
If you are a dependent, then your income tax would be more like $455.
In either case, you’d owe self employment tax, for social security and medicare, of around $1413.
This assumes a net income of $10,000 after any associated allowable expenses have been deducted.
v b
March 12, 2010 at 1:56 am
Your clients are going to be bummed when you fill out the W-9. As a sole proprietor, they are *still* required to issue you a 1099-Misc if they pay you $600 or more. That’s true whether you provide them with an SSN (preferred) or an EIN.
You will be classified as a sole-proprietor. You would file income and expenses on a 1040 schedule C, use schedule SE and when filling out the W-9 for clients, you will show Individual, Name, and SSN.
The only way your clients can avoid the 1099-Misc is to only deal with corporations. However, the cost of incorporating or electing to be an S-corp is not worth it for the amount of income you are talking about.