Tax Implications

I searched but couldn't find many threads about tax.

I know most companies send out 1099's, but what exactly does that imply? Is there a site that shows the percentage of tax to expect to pay from internet revenue?

I need to set aside money each month in 2006 to pay tax, so it doesn't come up on me the last part of the year.

Just any help or experiences would be appreciated.

 

Most companies require you to fill out a W-2 form if payments to you exceed $600 in a year, they 1099 you with the amount paid around this time of year. How much you'll have to payout really depends on how much you made last year and various other factors. You'll likely be making quartery estimated payments this year based on what you made last year, assuming it was high enough. Keep in mind you don't have to make estimated payments, but you are subject to a penalty if you don't. The self-employment tax rate is 15.3%. 12.4% for social security and 2.9% for Medicare. Plus any federal and state taxes on top of that.

 

So is the federal and state taxes about the same as it would be from a paycheck? If so, isn't that pushing about 50% of your gross profit being taxed?

 

I just got my google tax form (a 1099.) Taxes should be similar, but you have business expense write offs, and self-employment tax. You should really just take your stuff to a tax accountant. Its impossible to accurately keep up with all the changes in tax law.

 

In MN I end up paying about 35% of profit to tax. You could try your Sec of State office, or a quick consultation with a CPA.