How to track 1099 income AND W2 income in Wave?

kaykay331

I get paid via both 1099 and W2 for one of my businesses. How do I track that income accurately in Wave to distinguish between the two so that when it comes time to pay taxes, I don't end up including my W2 income (which already has taxes taken out of it) in with my 1099 income that I still need to pay taxes on quarterly? Is there a feature that helps with this automatically, or would the only way to calculate my 1099 income be to take my total income and subtract the W2 invoices/payments by hand (which sort of defeats the purpose of using software to a degree, no?) Would I create a separate income account maybe?

Mikeg

@kaykay331,
Although they are both "active income" from the IRS's perspective, they are reported differently. You would not mix a W-2 with income that are making on a Schedule C. Your 1040 will give you the total that you made.

kaykay331

Thanks for the suggestion, Mike, but unfortunately, I'm looking for a way to track before I get to the end of the year and filing a 1040/etc since I have to pay quarterly taxes throughout the year. Sorry if I was unclear in my earlier post, but I am looking for a way to estimate how much I owe in real-time or even just how much I am making in each "category" in real-time. My CPA files my end of year income on separate forms, like you mentioned, but I would like to distinguish the two methods of income in Wave so that I can have a better awareness of where I'm at week-to-week or even day-to-day (obviously before deductions, etc). Thanks for your thoughts, though! Much appreciate!

ttdvm

I'm no CPA, but I had this problem, too. I have a small amount of W2 income that I need to make invoices and receive payments for. I didn't want to make a whole separate Wave account for just a few transactions per year, so here's what I did:

1. Under the Chart of Accounts section, I created an Asset account called "W2 Income."
2. Under the Sales section, I made a product/service called "W2 service" and use that on my invoice to W2 clients.
3. When the W2 client pays me I physically deposit the check into my PERSONAL bank account NOT my business bank account attached to my business Wave account (very important!).
4. Then, I open the invoice, click "record a payment" and set the deposit account to the "W2 Income."
5. Finally, in the transaction section, enter a new transaction as follows: Description: "Owner's Draw," Account: “W2 Employee Income,” Category: “Owner’s Draw” in the same amount as the invoice payment.

On my Profit & Loss report, it shows up as "W2 service" income, which I simply disregard when doing my schedule C at the end of the year.

I'm not sure if this is the best or only way to do it, but it works for me!