How to File Taxes As a Subcontractor

Tax file

Step 1

Gather all your Form 1099’s for the tax year. Gather receipts for all business expenses during the year. Because you are self-employed, money you spent toward generating, maintaining or performing business is deductible against your income. Expenses for a subcontractor might include items such as a cell phone, office supplies, tools and equipment, self-employed health insurance and supplies.

Download the form from the IRS website

Step 2

Acquire a copy of IRS Form 1040 Schedule C – Profit or Loss From Business. You can download the form from the Internal Revenue Service website.

Enter your personal information

Step 3

Enter your personal information in the top section, Lines A through E. Select your accounting method on Line F. Most subcontractors elect a “Cash” basis of accounting. In Line G, select “Yes.” “Materially participate” means you worked directly in the business during the year. Check the box in Line H if you started subcontracting for the current tax year.

Calculator

Step 4

Enter your income and expense information in Part I and Part II of the form. Perform the calculations per the tax form for Line 28 and Line 29. If you used a room in your home specifically and exclusively for a home office, you can deduct a portion of the cost of the room on your taxes. Complete and attach Form 8829 if you wish to claim a home office deduction. Enter the total amount of the home office deduction from Form 8829 on Line 30 of the Schedule C. Perform the calculation for Line 31. For Line 32, check the box entitled “All investment is at risk.” This means that any money you invested in the business is subject to being lost if the business goes under.

Complete the rest of the form

Step 5

Transfer the profit from Schedule C to Schedule SE, Line 2, and complete the rest of the form to calculate self-employment FICA, Medicare and Medicaid taxes due on your earnings. Transfer the total amount of self-employment tax due (Line 5 on Schedule SE) to Form 1040, Line 56. Transfer the amount on Line 6 of Schedule SE to Form 1040, Line 27.

Submit your tax return electronically

Step 6

Complete the remainder of Form 1040, and submit your tax return electronically or by mail.