i worked under the table - how can i figure out aproximate tax due?

Question

i worked for about 7 months at $23 hour. 40 hour work week. haven't specifically saved for taxes .my employer has now decided to put me on the books. is their any way to fight for lost benefits? or find out if i am a legitimate employee or what? is the employer responsible for any taxes? i was paid on company checks.

Answer 1

You can file as a self-employed person, or file as an employee and this will get the employer in some pretty serious trouble for not paying Social Security and Medicare taxes on your wages.

Whether your employer withheld payroll taxes or not, you were responsible for quarterly taxes, so penalties may be assessed on you as well.

If you file as self-employed, then you can take expenses related to your job, including mileage to and from work, equipment, supplies, and possibly health insurance premiums you paid if you had no other coverage. You will pay income tax, plus approximately 15.3% self-employment tax (Social security of 12.4% and Medicare of 2.9%) on the net after expenses.

If you file as employed, you cannot take expenses out of your pay. You would have to itemize on Schedule A and it would be difficult to reduce your gross wages of $28,800. You would pay income tax, plus 7.65% payroll tax (6.2% Social Security and 1.45% Medicare). You would have to fill out a form showing that you were an employee. This would trigger a letter to your employer demanding payment for his share of Social Security and Medicare, plus large penalties for failing to pay on time.

Figure out which is the best way for you to go. If you can take enough expenses as a self-employed person so that you pay no more tax (income tax plus 15.3% self-employed tax) as you would pay as an employee (income tax plus 7.65% payroll tax), then you may as well file as self-employed if you want to keep your job.

Example: Say you have $5,000 in expenses and are single with no dependents, gross wages $28,800.

Self-employed:

Income tax about $1900
SE tax about $3500
Total $5400

Employed

Income tax about $2,600
Payroll tax about $1,800
Total tax $4,400

Plus interest and penalties for not paying on time.

I don't know of any way you can argue for back employee benefits after seven months of being paid as a non-employee.

Answer 2

I have never worked under the table like that but boy did they just screw you up. I'm not sure if you can do anything legally since you were being paid under the table. It sounds like they didn't withhold taxes from your check or SS or Med so yeah, you will have to pay those. There are boxes on the W-2 that list how much you paid for each so that the government can make sure you pay the right amount. Also your employer will have to pay some (some people don't realize that if their check says they put $10 into SS then their employer just put in $10 as well, it's a match type deal.) Your $23 an hour just became a lot less...

Answer 3

The employer will be responsible for taxes, but that has nothing to do with you, those are strictly the liability of the employer. You will have to pay income, medicare & SS tax on your earnings. The % will depend on your adjusted gross earnings. You can look this up at the IRS web site.

Answer 4

Are they putting you on the books as of NOW, or for all 2006?

In any case, you owe taxes and should have deducted for that. The employer pays NO income taxes on you...that is yours to do. They should have deducted for 2006 tho...but that is your responsibility in any case.

Answer 5

you can bet that aout 25% OF THAT IS DUE TO uncle sam sry for the caps lock.... contact a tax attorney

Answer 6

first find out exactly what employer is up too ! Make sure your not being scamed .

Answer 7

You are talking about ALL ILLEGAL ACTIVITIES.

You need to decide for yourself, as you are an adult.

www.irs.gov
forms, schedules, and instructions on filing.

GOD bless.
CPA-retired