How to Estimate Taxes on a 1099-Misc
- 1). Examine the 1099-Misc form you have received for the previous tax year. Income on the form can be found in Box 1, Box 2, and Box 7. Box 1 is for rental income, Box 2 is for any royalties received for the use of property and Box 7 is for nonemployee compensation.
- 2). Add the amounts from Box 1, Box 2 and Box 3 with a calculator. Make a note of the total on a piece or paper.
- 3). Determine the amount of self-employment tax that applies for the previous tax year. Self-employment tax consists of Social Security and Medicare. In 2009, the Social Security tax was 12.4 percent, and the Medicare tax was 2.9 percent.
- 4). Multiple the total from step 2 by .124 to estimate the amount of Social Security tax and .029 to estimate the Medicare tax. Alternatively, you can use an online calculator to estimate the amount of tax that you will owe (see Resources).
- 5). Estimate the amount of tax you will owe by using the withholding calculator that is provided by the IRS (see Resources). This calculator allows you to input deductions and any federal income tax that you have already paid.
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