Texas Independent Contractor or Freelancer Income

If you are a Texas worker earning a salary or wage, your Texas employer reports your annual earnings at year-end on IRS Form W-2. However, if you are an independent contractor, freelancer or Texas self-employed you probably receive a Form 1099. from each business client that pays you at least $600 per year during the tax year.

For example, if you are a freelance writer, consultant or artist, you hire yourself out to individuals or Texas companies on a contract basis. The income you receive from each contract or job and or service you take part in should be reported to you on by the Texas business on Form 1099. When you prepare your tax return, the IRS requires you to report all of this income and pay income tax on it. Your are still required to report all of your income even if you do not receive a form 1099.

1099 from interest and dividend income

When you own a portfolio of stock investments or mutual funds, you may receive a Form 1099-DIV to report the dividends and other distributions you receive during the year. These payments are different than the income you earn from selling stocks. Rather, it is a payment of the corporation’s earnings directly to shareholders.

Other types of investments you have may pay periodic interest payments rather than dividends. These interest payments are also taxable and are usually reported to you on Form 1099-INT. Commonly, taxpayers receive this form from banks where they have interest bearing accounts.

1099-C income from debt cancellation 

Sometimes, transactions can increase your taxable income even when you don’t receive a payment. This commonly occurs when a creditor cancels a portion of your outstanding debt. When this happens, the IRS treats the debt cancellation as income which may be taxable to you. For example, if your credit card company no longer requires you to pay your outstanding balance, it may send you Form 1099-C to report the amount of debt it cancels and you may need to report this amount on your tax return.

1099 income from Government payment Income

The federal and state governments are equally responsible for reporting income that it pays to taxpayers. Government agencies commonly use Form 1099-G to report the state income tax refunds and unemployment compensation you receive during the year. If you receive unemployment income, you must include the entire amount your state reports on the 1099-G form in your taxable income. However, you only include your state refund in income if you claimed a deduction state income taxes in a prior tax year.

Income Withdrawals from a retirement account

When you withdraw money from your traditional IRA, in most cases it is taxable. You will receive a Form 1099-R that reports your total withdrawals for the year. The form also covers other types of distributions you receive from pension plans, annuities and profit-sharing plans. Usually the 1099-R will show the taxable amount of the distribution on the form itself and will report the amount of federal tax that was withheld.

1099 SELF EMPLOYED TEXAS MORTGAGE LENDERS QUESTIONS AND ANSWERS

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NO INCOME TEXAS MORTGAGE LENDERS COVERAGE AREAS