Tax witholding for private contractors?

Question

I work as a private contractor in California. I recieved my first paycheck at a new place for less than the agreed upon amount per year...is this due to company tax witholding? It happens to be almost exactly 7.6% off, leading me to believe that this is the first round of taxes taken out...but I can't be sure.

Also, what is the other amount I have to set aside to send into the IRS per quarter?

Answer 1

Did you ask why your check is less than the agreed upon amount? That would be a good first step.

If you're an employee, not a contractor, they'd withhold 7.65% for social security and medicare.

The amount to send in quarterly if you're a contractor is 15.3% of your net income, after subtracting allowable expenses, for social security and medicare, plus whatever income tax you expect to owe, if any, on the amount - that would vary too much to even give you a ballpark figure without a lot more information.

Answer 2

Taxes can be withheld from contractors if they fail to provide a valid Tax ID number ( SS#). This is called backup withholding. But that is 20%.

States can also withhold from contractors. Massachusetts requires that all companies doing business in the state give them a list of all employees and contractors and their SS#s so that if any of them owes back child support, they can garnish those payments. Other states may do th same.

Answer 3

Taxes aren't withheld from the pay of independent contractors. Demand that they either explain what is going on or pay the difference.

As far as making your required quarterly estimated tax payments, download the Form 1040ES package from the IRS website. I has worksheets to help you estimate your tax liability and work out what the payments need to be. You should review your figures quarterly and adjust your payments up or down based upon your actual income.

Answer 4

I haven't heard of a client withholding for taxes. clients generally send you a 1099 at the end of the year with a figure of what they paid you. if the client claims that is withholding you better make darn sure it is paying the tax to the gov't ( i personally think it's nonsense) as for your quarterly estimates. try to project what your yearly income is and file (fed, state quarterly) paying a 1/4 of estimated taxes. Try using quick books. Good luck and find a decent accountant.

Answer 5

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