What are the Self Employed 1099 or W2 Filing Guidelines?

When tax season rolls around, everyone needs to know the self employed 1099 or w2 requirements. Like with everything, the Internal Revenue Service has strict guidelines concerning self employed workers.

Knowing the self employed guidelines is perhaps more crucial now than ever before. In the third quarter of 2020, we saw self employment skyrocket to new heights. Individuals sent the Internal Revenue Service a total of almost 1.6 million applications for new employer identification numbers (EINs). So, as we grapple with our new reality, we must also first understand who is considered a self employed worker.

 

 

Am I Self Employed?

The Internal Revenue Service classifies certain groups as self employed. Among these groups are independent contractors, sole business proprietors, and workers who receive a 1099-NEC rather than a W-2 form. The IRS also views you as self employed if you practice a trade as your business.

 

What Tax Forms Do Self Employed Workers Submit?

The Internal Revenue Service outlines the self employed 1099 or w2 requirements. All self employed workers must show payments for their services on Schedule C (Form 1040). The form shows the profit or loss from a business, or a sole proprietorship. Self employed people must also submit Schedule SE (Form 1040), Self Employment Tax. Individuals will pay a self employment tax on their net earnings that meet or exceed $400.

 

Know Your Company’s Tax ID Number

All employers should carefully keep track of their company’s tax ID number. It is not entirely unlike how you have a Social Security number (SSN). However, you must apply to receive a unique employer identification number. You will find that certain exceptions do exist for some self employed 1099 or w2 workers.

First, check your state’s requirements. If you do not have any employees in certain states, you can use your Social Security number to report your self employment income. However, some states will require you to have a separate number regardless. In that case, you must submit an online Form SS-4. Sending the EIN application form to the Internal Revenue Service will help you get on track with your business.

 

How Does Filing Work for Joint Owners?

The Internal Revenue Service has special rules for spousal business teams. You and your partner must exist as the sole business members of your company. You must also both be workers and operators for the business. If that applies to your company, you can choose to be viewed as a qualified joint venture. You will file two Schedules C or Schedules F. By doing so, you will effectively split all expenses and income.

 

How Does AMS Software Help?

Our software allows self employed 1099 or w2 workers to prepare themselves each tax season. Self employed individuals can use our Software Generated Forms. These forms will let you print most forms from your printer on plain white paper. If you contract with self employed workers, you’ll get a lot of use out of our W2/1099 Forms Filer, which is our base platform. Our software makes worrying about aligning forms a past concern. You will also not need to worry about running out of any forms.

 

 

Software Solutions from AMS

Our W-2 and 1099 Forms Filer is our only required platform. From there, users pick the services they need. Choose from the tools below to build out your customized accounting software.