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PDF Editor FAQ

Is a 1099 employment considered to be self-employment?

If you are paid by anyone as a non-employee, for example if you are self-employed and you do work for someone else and are paid a wage or fee for it, the person or organization for which you do the work is supposed to send you and the government a 1099 form, showing how much money was paid to you, how much tax, if any, was deducted and paid to the government, and so forth. For example, I occasionally teach a guest lecture in a course at a local university as a substitute for a regular faculty member who may be unavailable for that specific lecture. Each January they send me a 1099 form indicating how much they paid me for doing this.Then you, as a self employed individual, file your taxes and show income from those 1099’s on Schedule C, and show payroll tax due on a Schedule SE (they call it “self employment tax” - it is actually Social Security and Medicare tax). I use TurboTax Home and Business for this, and it asks all the relevant questions and fills in all the relevant schedules.Note that you might have a regular, full time job as well as a separate, self-employed job.There are certain circumstances where you don’t have to bother with this, such as paying a neighbor’s teenager to be your baby sitter. You need to read IRS publication 334 and perhaps a few others to see all of the rules about this.One advantage of being self-employed is that you can open a SEP IRA and the limit to how much you can contribute is based on how much money you earned. I recall one year when I made a lot of money in my self-employed business and I was able to contribute quite a lot to that SEP IRA (much higher than the limit on regular IRAs). I was also able to deduct some of my health insurance premiums.

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