1099-MISC Income: How To Calculate Its Tax?
One thing that any adult would not be able to evade are taxes imposed by the government. Workers of diverse industries would surely nod their heads in agreement to the fact that paying taxes is a responsibility we can’t simply evade even if you are self-employed. When you’re receiving income from self-employment, you would have to ensure that you are meeting the 1099-MISC taxation if you want to have a bite of some of the government’s many benefits which include insurances, loans and more.
It doesn’t matter if what you’re currently dealing with right now is a freelance job or your own business – you would still have to accomplish the 1099-MISC form and comply to it. There’s no doubt that computing 1099-MISC Taxation is something that some may find elusive given the fact that not many may know of it but, what you should keep in mind is being organized at all times with both your earnings and expenditures. Still, the question remains as to how to calculate tax on 1099-MISC Income. Here are some details that may be crucial to you, especially if this is your first time.
As a self-employed individual, you may be dealing with multiple income paths and this makes it apparent that you may also find yourself with multiple 1099 tax forms and the first step involves adding those taxes altogether. You should place emphasis on calculating the right amount of income you have gained.
The step after that is for you to find out your net income. This is where your expenses would come into play as they will be crucial to your net income. Subtracting your expenses from the total income would result to the net income you have for the set duration of time.
The net income of course, isn’t the basis for the tax you’ll have to pay and this is where you would have to compute for the taxable income. The most common computation involves the net income being multiplied to 0.9235 or 92.35%. The resulting taxable income after you have made the multiplication, would be where you’ll base the tax you’d have to pay for in the 1099-MISC.
The computation still isn’t finish when you get the taxable income as you would still have to make sure that you accurate compute the tax you’ll have to pay from there. You should know that the bigger your income is, the higher taxes you’ll have to pay but when it comes to the percentage you’ll be responsible of paying – this would boil down to the tax schedule imposed on your area.