I started a new job with a friend, and they pay us with personal checks. At the end of the year I want to declare my taxes, but how much or what is the exact percent that they deduct from each pay check.. I know that the more you get paid, the more taxes you pay.. But, is there an exact percent for that? I just want to know so when the tax period comes, I know how much I need to pay and not get any surprises. Please help!!!!!
2007-06-07 09:51:29 · 5 answers · asked by rickylorens 2 in Business & Finance ➔ Taxes ➔ United States
You better make sure that your friend is taking out payroll taxes out of your paycheck, otherwise you'll be in for very big surprises at year end. I don't know what state you are in, so can't tell you that, and there are different brackets for the federal tax rates. I have included the 2006 & 2007 federal tax rates though. The thing that I hope isn't a surprise at the end of the year is social security and medicare taxes. The friend should be taking out 7.65% of your paycheck and also setting aside a matching amount as your employer. If the friend is not, then he/she might give you a 1099 at year end, and you would be responsible for paying the social security/medicare taxes, which would be 15.3% since you'd be your own employer. You had better check with your friend.
2007-06-07 10:45:34 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Your employer must give you a pay stub each payday that lists all deductions from your pay. The percentage will vary based upon your income and the number of withholding exemptions you claimed on your Form W-4 that you filed with your employer when you were first hired.
At the end of the year they will send you a Form W-2 that will list your total income and all amounts withheld from your pay for the year. You'll use that W-2 to prepare your tax return. If you claimed the proper exemptions on Form W-4 you should not have to pay anything and will get a small refund of the excess taxes withheld from your pay.
If your "friend" is not withholding taxes from your pay, he or she is probably breaking the law. You will be in for an extremely rude shock at the end of the year as you'll have a massive tax bill that you will need to pay.
2007-06-07 20:09:31 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 0⤋
Who are "they" that pay you with personal checks? Ask "them" what they are deducting from your checks for income tax, social security and medicare.
As others have surmised, it sounds like you are being paid under the table by persons, out of their personal money. Get it straightened out from them.
If you are working regular hours, then you are an employee and your employer needs to take out Social Security and Medicare taxes from your pay and send it in, along with the employer match.
If you are not an employee, then you will need to set aside money to pay your taxes. As a rule of thumb, set aside 25% to cover the approximate 15% of Social Security and Medicare, and a minimum tax bracket of 10%.
It's good to settle this question now rather than wait and have a surprise come tax time.
2007-06-08 00:57:21 · answer #3 · answered by ninasgramma 7 · 0⤊ 0⤋
You'll owe 15.3% for self-employment tax. Your income tax will depend on how much you make, your filing status, any dependents, deductions or credits. The more you make, the higher the percentage, so no way to answer that part. You need to file quarterly estimated returns and send in the estimated tax for that quarter.
2007-06-07 21:22:08 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
Do you get a pay stub with the check? If not, then you could be in serious trouble come tax time.
2007-06-07 18:40:44 · answer #5 · answered by Steve 6 · 0⤊ 0⤋