I've just begun mystery shopping and it says i'm an independent contractor...my friend said that means when tax season comes around I mite have to pay taxes since they don't take it out of my paycheck...i was wondering is this true and what exactly does it mean to be an independent contractor?
2007-04-25 04:09:26 · 2 answers · asked by m0nkey98 1 in Business & Finance ➔ Taxes ➔ Other - Taxes
Taxwise, it means that you are responsible for your own taxes, the employer won't withhold them. Depending on your income and other factors, you might or might not owe income taxes, but if you make over $400 as a contractor, will pay self-employment taxes of 15.3% for social security and medicare. If you expect to have any significant tax liability, you should make quarterly estimated payments.
2007-04-25 05:25:39 · answer #1 · answered by Judy 7 · 1⤊ 0⤋
According to the IRS, the general rule is that you are an independent contractor if the payer can only control or direct the RESULT of your work, but not the means and methods of accomplishing the result. If you are allowed to work whenever you want (which I understand to be the case with mystery shopping), then you are not an employee. That means that whoever cuts your checks is not required to withhold self-employment taxes and you are stuck with the entire 15.3%.
Check the IRS link below for details.
2007-04-25 04:36:12 · answer #2 · answered by Anonymous · 1⤊ 1⤋