If you're a dog walker, then you might be wondering how to handle the taxes on your Rover 1099 or Wag taxes. Well, the team at Bonsai is here to help. We will show you some tips and tricks that will let you avoid penalties for not filing 1099 or paying your taxes when due. Plus, it'll save you money in the long run too.
In this article, we'll go over the different types of IRS tax forms you'll receive, how to calculate your 1099 taxes for how much you owe, quarterly estimated taxes, and we'll show you an easy way to maximize your tax liability with 1099 tax-write-offs.
This will be your one-stop guide to reporting everything about your form 1099. Now, without further ado, let's get started.
Note: if you would like to make your Rover freelancer taxes a breeze, use Bonsai Tax. Our tax software helps you organize business deductions, remind you of filing deadlines and estimate your taxes owed. You'll be able to have a peace of mind for your taxes while you watch and babysit furry little friends. Try a 14-day free trial today.
If you take care of dogs for the Rover app, you are considered an independent contractor and not an employee.
A 1099 tax form is a dedicated document for independent contractors or self-employed business owners. Rover is obligated by the IRS' requirements to send out the tax forms by January 31. There are many reasons why you might not receive a 1099 tax form, but we'll talk about that later.
You'll receive a 1099 form -K or -NEC depending on how much money you earned and what platform your payments were dispersed from, determine which tax form you'll receive.
Let's break down the two types of 1099 forms you'll deal with as Rover contractor.
Here are the requirements for when you will receive each tax form.
If you withdrew more than $600 in the calendar year in Rover payments, you will get a 1099-NEC tax form (before 2021, you'd get a 1099-MISC) sent to the address displayed on your W-9 by January 31. An electronic copy of your 1099 tax documentation will be sent by email as well. To obtain a print copy of your tax information, simply contact Rover via email.
You will not receive a 1099 from Rover if you withdrew payments via PayPal or other third-party processors. Instead, you'll get a 1099-K and other tax documentation from these platforms i.e. via Paypal. You'll be responsible for paying taxes based on these platform's reporting rules instead of Rovers.
You will also receive a 1099-K if you've had over 200 transactions as well as made more than $20,000 in the last calendar year to your Paypal account.
If you made less than $600 through Rover's platform, you might not receive a 1099. The IRS does not require companies to provide 1099 forms to those who made less than $600, however, you still need to pay taxes on the income. A copy of your earnings is sent to the IRS by January 31 as well. Just be sure to stay on top of when 1099s are due.
If you made less than $400, you are not required to file 1099 taxes, however, you still need to pay federal income tax.
You can easily access all of your earnings information and tax documentation from your account on the website via rover.com.
Double-check the information. The 1099-NEC Box 1 total should have all the transactions and equal the payments you received through Rover in the last calendar year. This box is for all "nonemployee compensation"
If you need help with your taxes, contact a tax advisor or professional.
Contact customer support if you earned more than $600 but you did not receive a form 1099 from Rover. These forms need to be filed before April 15th to avoid a 1099 late filing penalty.
It's time to talk about the not-so-pleasant part of the article: how much you need to pay in taxes to Uncle Sam.
The self-employment tax rate for 2021 is 15.3 percent of net earnings. That rate is made up of a 12.4 percent Social Security tax and a 2.9 percent for Medicare tax.
It should be noted, the first $142,800 in earnings is subject to the Social Security component. It was previously $137,700 in 2020.
You can easily use our 1099 tax calculator to see how much you'll owe in Rover taxes.
The U.S requires independent contractors to pay taxes four times a year instead of all at once. You can calculate how much you need to pay in estimated taxes by adding up all of your tax liability for the previous year or self-employment tax, income tax, and any additional taxes and divide that number by four.
There are specific dates you need to send your payments to the IRS.
The due dates for your Rover estimated taxes are:
There are penalties for missing estimated payments, underpaying your duty, and late filings. The IRS calculates your late filing penalty for your quarterly taxes by estimating how much you should have paid each quarter and then determining a quarterly tax penalty.
The IRS then takes the percentage or penalty rate to figure out your fees for being late or underpaying the taxes you owe.
if it's a sitter's first year as an independent contractor, they will not suffer any penalties for not paying their quarterly taxes. Also, if you provide an authorized reason for why you didn't pay, like disability or death in the family to name a few, you will not be penalized for your taxes.
The most hassle-free way of paying your 1099 quarterly taxes is by using the IRS direct pay.
The beauty of being a 1099 contractor is you are considered a small business and can take advantage of tax write-offs related to running your Rover sitter service. All you need to do is fill out a Schedule C. A Schedule C or Form 1040 is a form that reports your self-employment earnings (profits and losses). Keep all of your business expense receipts to properly record tax deductions.
Some common 1099 tax deductions you can use to minimize your tax liability are:
You are responsible for tracking and keeping documentation of all these receipts. If you are looking for a completely hands-free way to organize your expenses and save cash, try Bonsai's 1099 expense tracker.
We hope this article answers all the questions about handling your 1099 Rover tax return. Remember, you should receive your form shortly after January 31st, and. you'll need to file a Schedule C along with your form 1099. These tax forms can be found online on the IRS website. If you have any related questions to anything about getting a 1099 from Rover or how to file, contact a professional tax advisor for a quick discussion or advice. Also, for more information and answers to related questions about Rover taxes, they have an FAQ section along with customer support via Rover.com.
Disclaimer: the information we provide here is not tax advice. Contact a tax advisor for answers to your questions on how to report your income as well as any 1099 reporting tips.
A verbal contract (formally called an oral contract) refers to an agreement between two parties that's made —you guessed it— verbally.
Formal contracts, like those between an employee and an employer, are typically written down. However, some professional transactions take place based on verbally agreed terms.
Freelancers are a good example of this. Often, freelancers will take on projects having agreed on the terms and payment via the phone, or an email. Unfortunately, sometimes clients don't pull through on their agreements, and hardworking freelancers can find themselves out of pocket and wondering whether a legal battle is worth all the hassle.
The main differences between written and oral contracts are that the former is signed and documented, whereas the latter is solely attributed to verbal communication.
Verbal contracts are a bit of a gray area for most people unfamiliar with contract law —which is most of us, right?— due to the fact that there's no physical evidence to support the claims made by the implemented parties.
For any contract (written or verbal) to be binding, there are four major elements which need to be in place. The crucial elements of a contract are as follows:
Therefore, an oral agreement has legal validity if all of these elements are present. However, verbal contracts can be difficult to enforce in a court of law. In the next section, we take a look at how oral agreements hold up in court.
Most business professionals are wary of entering into contracts orally because they can difficult to enforce in the face of the law.
If an oral contract is brought in front of a court of law, there is increased risk of one party (or both!) lying about the initial terms of the agreement. This is problematic for the court, as there's no unbiased way to conclude the case; often, this will result in the case being disregarded. Moreover, it can be difficult to outline contract defects if it's not in writing.
That being said, there are plenty of situations where enforceable contracts do not need to be written or spoken, they're simply implied. For instance, when you buy milk from a store, you give something in exchange for something else and enter into an implied contract, in this case - money is exchanged for goods.
There are some types of contracts which must be in writing.
The Statute of Frauds is a legal statute which states that certain kinds of contracts must be executed in writing and signed by the parties involved. The Statute of Frauds has been adopted in almost all U.S states, and requires a written contract for the following purposes:
Typically, a court of law won't enforce an oral agreement in any of these circumstances under the statute. Instead, a written document is required to make the contract enforceable.
Contract law is generally doesn't favor contracts agreed upon verbally. A verbal agreement is difficult to prove, and can be used by those intent on committing fraud. For that reason, it's always best to put any agreements in writing and ensure all parties have fully understood and consented to signing.
Verbal agreements can be proven with actions in the absence of physical documentation. Any oral promise to provide the sale of goods or perform a service that you agreed to counts as a valid contract. So, when facing a court of law, what evidence can you provide to enforce a verbal agreement?
Unfortunately, without solid proof, it may be difficult to convince a court of the legality of an oral contract. Without witnesses to testify to the oral agreement taking place or other forms of evidence, oral contracts won't stand up in court. Instead, it becomes a matter of "he-said-she-said" - which legal professionals definitely don't have time for!
If you were to enter into a verbal contract, it's recommended to follow up with an email or a letter confirming the offer, the terms of the agreement , and payment conditions. The more you can document the elements of a contract, the better your chances of legally enforcing a oral contract.
Another option is to make a recording of the conversation where the agreement is verbalized. This can be used to support your claims in the absence of a written agreement. However, it's always best to gain the permission of the other involved parties before hitting record.
Fundamentally, most verbal agreements are legally valid as long as they meet all the requirements for a contract. However, if you were to go to court over one party not fulfilling the terms of the contract, proving that the interaction took place can be extremely taxing.
So, ultimately, the question is: written or verbal agreements?
Any good lawyer, contract law firm, or legal professional would advise you to make sure you formalize any professional agreement with a written agreement. Written contracts provide a secure testament to the conditions that were agreed and signed by the two parties involved. If it comes to it, a physical contract is much easier to eviden in legal circumstances.
Freelancers, in particular, should be aware of the extra security that digital contracts may provide. Many people choose to stick to executing contracts verbally because they're not sure how to write a contract, or they think writing out the contract terms is too complicated or requires expensive legal advice. However, this is no longer the case.
Today, we have a world of resources available at our fingertips. The internet is a treasure trove of invaluable information, platforms, and software that simplifies our lives. Creating, signing, and sending contracts has never been easier. What's more, you don't have to rely on a hiring a lawyer to explain all that legal jargon anymore.
There are plenty of tools available online for freelancers to use for guidance when drafting digital contracts. Tools like Bonsai provide a range of customizable, vetted contract templates for all kinds of freelance professionals. No matter what industry you're operating in, Bonsai has a professional template to offer.
A written contract makes the agreement much easier to prove the terms of the agreement in case something were to go awry. The two parties involved can rest assured that they're legal rights are protected, and the terms of the contract are sufficiently documented. Plus, it provides both parties with peace of mind to focus on the tasks at hand.
Bonsai's product suite for freelancers allows users to make contracts from scratch, or using professional templates, and sign them using an online signature maker.
With Bonsai, you can streamline and automate all of the boring back-office tasks that come with being a freelancer. From creating proposals that clients can't say no to, to sealing the deal with a professional contract - Bonsai will revolutionize the way you do business as a freelancer.
Why not secure your business today and sign up for a free trial?