my friend's boss pays her by check but doesnt take taxes out of it , how does that work?
2006-10-03 12:40:18 · 6 answers · asked by ? 2 in Business & Finance ➔ Taxes ➔ United States
If the employer is treating the person as an independent contractor, they will file extra forms at tax time, treating themselves as self-employed, meaning a substantial hit for social security taxes. Should also probably be filing estimated quarterly taxes. Very important that an accurate record of expenses are kept (mileage, etc) as these can be used to reduce income.
I'd also want to make sure that the boss is reputable - could be something underhanded going on here. Hope they are getting paid enough extra to make up for the added expense.
2006-10-03 13:07:14 · answer #1 · answered by domers13 2 · 3⤊ 0⤋
She'll have to claim all her wages at year end on her taxes and pay a portion in taxes, so she should be putting some of her paychecks aside for that. If it's by check, there is always a trail so she should not think she doesn't have to pay taxes. The IRS will know.
2006-10-03 19:48:35 · answer #2 · answered by Anne 2 · 0⤊ 0⤋
She should give you a 1099 at the end of the year and you file taxes and pay them at the end of the year. You clain deductions as well best advice since my husband gets paid the same way is put at least 10percent of your check in a savings accounty towards your taxes that you will have to pay. If she does not 1099 you than she pays you under the table and the government knows nothing of it.
2006-10-03 23:25:49 · answer #3 · answered by just divorced 2 · 0⤊ 0⤋
She might be considered an independent contractor.
In the US, you have to file self employment forms, which allow you to deduct expenses. She should be keeping a log of her expenses.
Whether she is self employed or not, if she makes a lot she may also be required to send quarterly payments to the IRS.
P.S. Also note that this could also mean that the employer could be underhanded. Beware. I had a friend who stopped getting paid, and the boss asked her how much she needed to get by, and eventually didn't get paid at all.
2006-10-03 19:47:50 · answer #4 · answered by Don't Know 3 · 1⤊ 0⤋
Sounds like she's working as and independent contractor. She will need to take out at least 15% of her pay and either send it in to the IRS or pay when she does her taxes.
2006-10-03 19:48:21 · answer #5 · answered by toomeymimi 4 · 0⤊ 0⤋
she will need to pay taxes at the end of the year. maybe, they get a tax information at the end of the year.
2006-10-03 19:43:43 · answer #6 · answered by koifishlady 4 · 0⤊ 0⤋