Anyone file taxes as 1099? How do you manage time worked/expenses/car mileage etc?

[niccig]

A continuation of me getting part-time research work at the museum. Our accountant would like me to be paid as a 1099 rather than with a W2. Main reason is that my salary is to be savings, and with a 1099 I can put some pre-tax money earned into an individual 401(k). If I was W2, I wouldn't work enough to get a 401K. I'm also thinking about trying to find a few other clients, rather than just the museum. I figure if they need someone to do research work because they're too busy and don't have anyone on their team, then other organizations might be in the same position, but not sure how to start this.

Any thoughts on 1099? on setting up freelance work?

If you need to manage time worked/expenses/car mileage for your job, how do you do it. I would have to keep track of these for reimbursement from employer or for deductions.

Thanks.
Nicci

[KrisM]

I don't get any form, as my extra income is from selling on ebay. I do report it as self-employment though. For mileage and other expenses, I just use Excel. For mileage, I keep a small notebook in the center console of my car and jot down the mileage and then transfer it once every couple of weeks.

[ThreeofUs]

1099ing is easy, especially if you have an accountant to help you out! Just be very careful of the details of everything you do.

I keep really detailed notes on 3x5 cards in my briefcase, and transfer these notes to an excel sheet for each project at the end of the week. I use the 3x5s as backgrounds for receipts, too, so I don't lose them and so I can note what the receipt refers to.

The employers I work for generally want very detailed reports of activity and expenses, so I need this level of information. This also helps at tax time, so our accountant knows how much of everything to deduct.

I have a home office, so I also ensure I have detailed records of home use and home maintenance (office space/house space = % of home maintenance and bills that can be applied to my business).

As for freelancing, I'd get business cards and work up a "brag sheet" of my services, and personally take it around to different places. (It would be best if you have a quote and a reference available from a satisfied customer on these.) See if you can talk to the head of departments and let them know you're available. Ask about projects they might need help on, and follow with phone calls. Set up a business development strategy and log so you know where you're going and where you've been.

There are some great business development books out there - search under "growing a business" for some help. I'll check my library for titles, but I think I've given all my books away....

And good luck!

[american_mama]

If you get paid via a 1099, you will have to pay more taxes out of pocket than you would if you got a W2 paycheck. That's one reason it is often cheaper for an employer to pay via a 1099.

I know when you do your taxes, you'll have to pay self-employment tax, about half of which is then deductible. Tubo Tax walks you through it nicely. In addition to the self-employment tax, you may have to pay your social security and something else... Medicare?... . Or maybe the social security and medicare is the same as self-employment taxes, I don't remember. I think the total adds up to 7.5%, and when you get a W2, the employer usually pays half.

I have one job where they reimbursed me for the taxes I had to pay that I wouldn't have had to do had it been a W2 paycheck. I just submitted an invoice once tax time rolled around and I knew the amount. It was a pretty poorly run organization, so I don't know if that kind of arrangement can readily be worked out.

[niccig]

Thanks everyone for the advice.
I know being a 1099 means more book keeping from my side of things, but in our tax situation, it's better for me to be 1099 than W2. Our accountant ran the numbers for us. The work I do won't be enough to get benefits, and the 1099 will let me have an individual 401(K) so we can have pre-tax savings and with some deductions, it's better for us financially.

I'll look around, get some books about setting up a small consulting business, and try to set things up so the book keeping is taken care of come tax-time.

We had dinner with friends over the weekend, and one of our friends works for a consulting company. Her clients are non-profit and profit, so I asked her about the need her clients may have for research to find out if there is a need for this work.. She told me that she needs research, and she's just been made partner. She told me some of the things she needed, and it's things I can easily do. She was excited and said she'll talk to her managing partner this week to talk more about it.

Ack...just got my first job. Our accountant called, he's trying to organize a trip to New Zealand with his son, and we talked briefly last week about airfares as I fly to Australia once a year. He said he doesn't have the time to research and find best airfares/b&b's etc, and as I know the region, he'll pay me to do it for him. Ack! Now I have to put my money where my mouth is re. research and work.!