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Independent Contractor Taxes

Use the 1040-ES form to pay both of these taxes.

You are eligible for Social Security tax and must pay for it through quarterly deposits. Where an employee and the employer would ordinarily each pay half of the 15.3%, you are self-employed and therefore must pay the full tax.

State Income Tax

Use the 540-ES form to pay your equipment, and the home-office deduction. You should always consult a qualified tax professional to determine your eligibility for these (and other) deductions.

Like federal income tax, state income tax should be calculated on your net income.

Call the Franchise Tax Board to request a copy of the estimated tax worksheet, current tax tables, and deposit coupons.

Independent contractors pay taxes on their income minus their business expenses.

An expense must be considered "reasonable and necessary" to be deductible.

It’s easiest to prove an expense is a legal deduction if it is used exclusively for your business.

Among the deductions that are frequently called into question are automobiles, cellular telephones, computer equipment, and the home-office deduction for your business. You must keep logs (such as mileage records) which clearly show when the equipment was used for business and when the use was personal.

You will have to pay fines for non-payment

You will have to pay the tax you originally owed.

You will have to pay interest on the unpaid amounts.

You still have to pay the current year’s taxes on time.

Declaring 1099 Income on Your Tax Returns

You have to report your 1099 income on form 1040, Schedule C, Profit or Loss from Business or Profession. You will also report your business expenses on this form. In certain cases, you may need to use a different form – consult a qualified tax professional for assistance.

You must also submit Schedule SE, form 1040, which is the Computation of Social Security Self-Employment Tax.

California also requires reporting of this information.