Does anyone know the general amount to put aside for taxes?

Question

I work at a job where they don't take my taxes out for me and I was thinking about opening up a savings account so that every week I get my check I can put something from it in my savings so that I won't be screwed when ts time to file for taxes?

I never done this before so anyone with any experiene on this please help!!

Answer 1

Your employer is obligated to withhold federal (and state) income taxes from your paycheck based upon the information you provided to them on the Form W-4 that you submitted to them when you started. If, however, you are considered an independant contractor they won't withhold the taxes. If this is your only real source of income, and your total income will not be greater than $40,000, I'd suggest you set aside 15% to 20% of your gross wages for your potential federal tax liability, and an additional amount for your state liability. The reason it's so high is that if you are self-employed, you will have to pay self-employment taxes as well as income taxes.

Answer 2

The IRS has specific rules about what is considered an independent contractor and what is not. You better check their rules at http://www.irs.gov to be sure everything is correct. My brother-in-law hired a supervisor for his ranch and after three years the IRS said he was not an independent contractor and my brother-in-law had to pay all the back social security and penalities.

If you are a contractor you are required to file estimated taxes quarterly. The form instructions will include tables so you can figure it out. There is a penality if when you file your 1040 you owe over a certain amount. When you file the 1040 your will also be required to pay the self employment tax which is the double Social Security and Medicare taxes.

Answer 3

Are you a licensed and insured subcontractor or a qualified statutory employee? If not, they should be treating you as an employee and withholding payroll taxes. To answer your question, worst case scenario is 50%. Figure 15.3% for social security & medicare, or self-employment tax, plus federal & state taxes at whatever your tax bracket is. And remember to track all of your expenses; you will only pay tax on the net profit of your business, not the gross. Keep a mileage log for all business miles driven aside from driving to your office and back home. And, go see an accountant at the end of the year!

Answer 4

As noted above, you need to pay estimated taxes quarterly (get form 1040-ES from irs.gov). It sounds like your employer is not paying for your FICA taxes (Social Security and Medicare) either. Are you considered a contract employee? If so, your taxes will be complicated and you should consider consulting a CPA.
Pay in at least as much as your total 2005 taxes

Answer 5

Check out this page for the appropriate fedreal income tax rate for your filing status.
http://www.irs.gov/formspubs/article/0,,id=150856,00.html

If you expected to owe more than $1000 in federal income tax, you should file estimated tax quarterly. Go to this site for instruction and forms. The next one is due on Jan 16th, 2007. http://www.irs.gov/businesses/small/article/0,,id=110413,00.html

If your employer refused to withhold your income tax, you should file estimated taxes whether you have the money set aside in a saving account.

Best wishes.

Answer 6

No thank you to assert without lots extra education. while you're an worker there is not any ought to set aside money for taxes by way of fact the taxes are withheld out of your wages in spite of in case you're paid in money, by using examine, or in frozen pizzas. once you're a self-employed company proprietor you're able to ought to make quarterly predicted tax money based upon your internet income and your person tax difficulty.

Answer 7

I have owned my own business and was told by an accountant that 25 to 30% is sufficient if you are self-employed or are working on a cash basis.

Answer 8

I'm a CPA and people like you need to pay quarterly estimated taxes.

You should consult with a CPA so you can avoid penalties for not paying your quarterly estimates.