Tax lawyers? Anyone? If paid as a "contract worker" and have no taxes withheld, must you pay them quarterly?

Question

For the first time in my life, I am being paid as a "contract" worker and no taxes are being taken out of my paychecks. Do I have to pay the IRS quarterly or can I wait until I file taxes for the year and pay them all at one time?

Answer 1

You are expected to pay quarterly payments. Go to irs.gov and check out the rules. There are penalties for not paying estimated taxes but you used to not have to do it the first year. The second year you are supposed to pay. . .I think. . .90% of the amount owed for the past year or 100% of what is due this year to avoid penalties. I may have that reversed. I usually take my taxes and social security due for the previous year and pay 100% divided into four payments. I'm working on the theory that I am making more money each year and I don't want to have to pay come 1040 time. Do you realize you pay your own social security too? You pay your portion and then you have to pay what an employer whould have paid and it comes to just under 15%. You get a deduction on the front of your 1040 for half the amount you paid. Social security is charged on net wages meaning you are entitled to certain deductions or expenses which you file on a schedule C. Look into all of this-it makes a BIG difference on what you eventually pay. Take the time to go read and learn. The irs documents are long and boring but you need to learn everything you can to protect yourself from paying too many taxes.

Answer 2

As a contract worker you are considered self employed and must file quarterly estimated tax with the IRS. Otherwise they may consider it underpayment of tax liability and charge you a penalty. You should receive 1099's for the contract work you did which states the amount of income. For 2006, go ahead and file taxes and if you remain on contract basis in 07, start filing quarterly estimated tax to avoid any problems. Good luck.

Answer 3

You are supposed to file quarterly if you will have tax liability. If you don't, you might end up paying a penalty for underwithholding when you file your return at the end of the year. If you owe under $1000 total, you'll be OK.

Answer 4

generally you may pay expected quarterly taxes in case you assume to owe greater an $a million,000. you should use the tax estimator on the H & R block cyber web website. verify to go into your earning as sort 1099 -misc & not as wages. If he's your boss (he tells you whilst, the place or the thank you to do a job and/or will pay you via the hour) you at the instant are not an self reliant contractor yet extremely you're an worker. He, via regulation, could withhold taxes and pay a million/2 of your social secure practices. Any rfile he has you sign that asserts you're an self reliant contractor does not carry any weight with the IRS. Remind him to get a replica of IRS booklet 1779 that explains this and that the IRS effects are extreme for unlawful sort of workers as self reliant contractors. Plus, he will nevertheless could pay all of the taxes (plus activity & late effects) he could have paid on your behalf whether you already paid them (you could stick to for a reimbursement).

Answer 5

If you owed no net tax last year then I think you are safe from penalty taxes on your first year. After that, you need to pay estimated tax in advance or risk owing extra for shorting the Fed during the year. If you did pay tax on your last return, and you expect to pay at least $1000 on your next year's tax return, you should pay estimated tax.

Answer 6

for this year, you should be safe because its the first time. file like you always do. from now own, you will need to file estimated taxes or face a penalilty, as long as you have that job.

Answer 7

I want to ask the same question as the previous person.