I think that is a little bit different because the accountant sends me the numbers every month according to what he is filing for us. and if i don't cough up the check... paid to my bank with an FTD 8109 coupon. if i am late, i get a penalty. with interest.
I think that is a little bit different because the accountant sends me the numbers every month according to what he is filing for us. and if i don't cough up the check... paid to my bank with an FTD 8109 coupon. if i am late, i get a penalty. with interest.
I don't undestand. You said in your first job you got paid cash every week with no taxes. That doesn't mean you don't have to pay those taxes.
It's time for you to talk to an accountant if you're this hopeless.
jupiter57
Diamond Member
- Nov 18, 2001
- 4,600
- 3
- 71
I've worked a few times as an independant Contractor with a 1099.
It's really not that bad, just be sure to keep each and every receipt you get for ANYTHING job related.
There are IRS guidelines, but certain clothing, vehicle expenses (either flat mileage, or payments, insurance, gas, maintenance), special tools or equipment like laptops, software, hardware, etc. can be deducted at the end of the year!
My best year as a General Contractor, I figured I had cleared over 90K, but after all my deductions, I only ended up paying around $600 in total taxes & Social Security.
Paying quarterly is good if you don't expect to have enough deductions to get your total down. Keeps you from getting hammered so bad at tax time.
IIRC, you pay in quarterly what you estimate you owe on what you make. At the end of the year, you square it away with IRS.
It's really not that bad, just be sure to keep each and every receipt you get for ANYTHING job related.
There are IRS guidelines, but certain clothing, vehicle expenses (either flat mileage, or payments, insurance, gas, maintenance), special tools or equipment like laptops, software, hardware, etc. can be deducted at the end of the year!
My best year as a General Contractor, I figured I had cleared over 90K, but after all my deductions, I only ended up paying around $600 in total taxes & Social Security.
Paying quarterly is good if you don't expect to have enough deductions to get your total down. Keeps you from getting hammered so bad at tax time.
IIRC, you pay in quarterly what you estimate you owe on what you make. At the end of the year, you square it away with IRS.
- Oct 30, 2000
- 42,589
- 5
- 0
Take 30% of your pay and put it aside into a special account that you WILL NOT TOUCH.
At the end of each quarter clean out that account and send it in to Uncle.
Start keeping track of every little item that you spend that is in anyway remotely related to the work and/or transportation and/or possibly supporting your field of work. As an independent, you have a little more leeway in writeoffs than as an employee.
At the end of the year, you will file a Schedule C along with your normal 1040 paperwork. On the Schedule C, you can itemize out all the things that you tracked during the year.
Tax S/W will guide you through what you need to enter; you will have to have the info at hand though.
You should be able to come out ahead of the game if you follow such advise.
At the end of each quarter clean out that account and send it in to Uncle.
Start keeping track of every little item that you spend that is in anyway remotely related to the work and/or transportation and/or possibly supporting your field of work. As an independent, you have a little more leeway in writeoffs than as an employee.
At the end of the year, you will file a Schedule C along with your normal 1040 paperwork. On the Schedule C, you can itemize out all the things that you tracked during the year.
Tax S/W will guide you through what you need to enter; you will have to have the info at hand though.
You should be able to come out ahead of the game if you follow such advise.
I think I was a bit unclear about something and maybe it'd make a difference, sorry if i was unclear.
im not an actual "contractor". i wont have anything for writing off. i don't work out of my home, and i only travel about 10 miles to the job. i work in this guys office and help him set up his events, do financial reviews, etc. mainly do his grut work while he teaches me things about the financial industry that im not getting out of college.
im not making tons of money. by the end of the yr im only expecting to make about $5-$6k. nowhere near $40-$50k.
however im being treated as an indep. contractor in terms of he's leaving all of my taxes up to me. however i have no write-offs whatsoever. the only thing i can possibly think that will help relieve me a bit is the fact i pay cash for my tuition each semester.
im not an actual "contractor". i wont have anything for writing off. i don't work out of my home, and i only travel about 10 miles to the job. i work in this guys office and help him set up his events, do financial reviews, etc. mainly do his grut work while he teaches me things about the financial industry that im not getting out of college.
im not making tons of money. by the end of the yr im only expecting to make about $5-$6k. nowhere near $40-$50k.
however im being treated as an indep. contractor in terms of he's leaving all of my taxes up to me. however i have no write-offs whatsoever. the only thing i can possibly think that will help relieve me a bit is the fact i pay cash for my tuition each semester.
ok. you should still make quarterly estimated tax payments to the IRS
if you'll make $5-$6k , then send the IRS a check for ~$500 in the 3rd and 4th quarters of this year. maybe a little more, eaglekeeper would have a better idea of the $ amount
if you'll make $5-$6k , then send the IRS a check for ~$500 in the 3rd and 4th quarters of this year. maybe a little more, eaglekeeper would have a better idea of the $ amount
CPA
Elite Member
- Nov 19, 2001
- 30,322
- 4
- 0
First off, from the sounds of it, your Employer is getting away with tax evasion. Why? Because if you are working on his premises, he has direct supervision over you (or his subordinate does) and there is no contract otherwise, you have an Employee-Employer relationship. Therefore, he MUST withhold taxes and file timely. Otherwise, everyone would be in a contractor/1099 situation.
That said, unless you are willing to be a whistleblower, then you are going to have to keep up on your taxes. What does this mean for you?
1) You will have to file quarterly estimated taxes. Not just for Fed, but also for state or local, if either apply to you.
2) You will have to pay the full Social Security tax (15.3%).
3) You should ensure that you will be receiving a 1099. This is important because you then will be able to reduce your "income" with expenses associated with the job. This will help reduce your taxes, which leads to....
4) Keep receipts of all of your job related expenses (mileage, meals, etc.) .
5) File a Schedule C at tax time.
6) Find a different job, if possible.
There is NO "being treated as an indep. contractor", you either are or you are not.
Now, if you don't do the above, then he is going to get nabbed because the IRS will expect a W-3 from him. My guess, though, is eventually this type of situation will catch up with him and he's going to get nailed hard.
That said, unless you are willing to be a whistleblower, then you are going to have to keep up on your taxes. What does this mean for you?
1) You will have to file quarterly estimated taxes. Not just for Fed, but also for state or local, if either apply to you.
2) You will have to pay the full Social Security tax (15.3%).
3) You should ensure that you will be receiving a 1099. This is important because you then will be able to reduce your "income" with expenses associated with the job. This will help reduce your taxes, which leads to....
4) Keep receipts of all of your job related expenses (mileage, meals, etc.) .
5) File a Schedule C at tax time.
6) Find a different job, if possible.
There is NO "being treated as an indep. contractor", you either are or you are not.
Now, if you don't do the above, then he is going to get nabbed because the IRS will expect a W-3 from him. My guess, though, is eventually this type of situation will catch up with him and he's going to get nailed hard.
thank you very much. im going to look a bit more into it, but the job doesn't seem worth it. it's not a job i need at the moment as i have another one that pays the small bills i have fine enough and it doesn't involve me having to worry about taxes. plus with my grades and everything I'd have no problem finding another internship for the fall.
now i have another question. I've only worked there a few days. I will be getting paid for those few days but it'd only be $200-$300. While that's all I will have made, it's still untaxed pay. Do I have to pay taxes on that small amount? Going furhter into it, I'd be getting paid but legally yet I cannot be working for him. I just found out, in the financial industry to officially be an employee at any company you have to get (and pass) a drug test and be finger printed. I haven't gone to have either of those done yet. So since I wasn't officially an employee of any kind though I was paid for short employee-employer services rendered, would i owe anything? Or is that considered such a small amount it doesn't even matter?
- Oct 30, 2000
- 42,589
- 5
- 0
Someone has to be responsible for the taxes.
It is either you or him. He is trying to aviod the extra paperwork costs and/or beat the system regarding additaionl overhead costs that he incurs with your being an employee.
The amount of taxes on the amount may be small, but it all adds up.
As stated before, you can STRETCH 1099 expenses to cover a lot of income related expenses; just takes a little imagination.
If you get another job, then I would notifiy the IRS on the employer; there is a good chance that you are not the only one that he is doing this to.
If you are working on his property and being paid for it, you are working for him. Splitting hairs over drug tests and background checks does not excuse to employment picture. Many companies may not want to go through that expense for short timers or part time help.
As an independent, you can deduct the cost of auto insurance/repairs/license tags, fuel, tires, etc on the vehicle.
Costs for transportation to/from school can be deducted.
Cell phone to stay in touch with work.
Having the internet available could be a partial expense (depending on the type of actual work that you perform).
Meals with co-workers become a business expense.
Many of these expenses will only work for a 1099 situation and also only for the time that you are actually "working" as an contracter.
Others can be proportional based on income or time.
It is either you or him. He is trying to aviod the extra paperwork costs and/or beat the system regarding additaionl overhead costs that he incurs with your being an employee.
The amount of taxes on the amount may be small, but it all adds up.
As stated before, you can STRETCH 1099 expenses to cover a lot of income related expenses; just takes a little imagination.
If you get another job, then I would notifiy the IRS on the employer; there is a good chance that you are not the only one that he is doing this to.
If you are working on his property and being paid for it, you are working for him. Splitting hairs over drug tests and background checks does not excuse to employment picture. Many companies may not want to go through that expense for short timers or part time help.
As an independent, you can deduct the cost of auto insurance/repairs/license tags, fuel, tires, etc on the vehicle.
Costs for transportation to/from school can be deducted.
Cell phone to stay in touch with work.
Having the internet available could be a partial expense (depending on the type of actual work that you perform).
Meals with co-workers become a business expense.
Many of these expenses will only work for a 1099 situation and also only for the time that you are actually "working" as an contracter.
Others can be proportional based on income or time.
- Oct 30, 2000
- 42,589
- 5
- 0
As CPA indicated, this is seriously twisted.
One could start employment in the industry and can be required to have the drug and background checks done. If either fail; you could (and probably will) be terminated.
However, if you are being paid; then your are an employee unless you can meet the IRS guidelines as an independent contractor.
The Gaming industry here in Nevada is that way. You must pass such regulations in order to work in the industry. Fail and you are out.
It is up to the emplyer to decide if they wish to employ you prior to such items being done. Most will not; such tests and checks take only 1-2 days.
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