I am hoping that I won't get hit with a huge tax bill at the end of the year. Also- can I make deductions for travel expense, clothing, cell phone, etc.?
2007-07-15 12:47:22 · 1 answers · asked by Rara 2 in Business & Finance ➔ Taxes ➔ United States
My employer told me she would pay for the Social Security and Medicare portions of my taxes; she upped my hourly rate to cover this. Does that mean I'll only be responsible for federal and state tax, not SS and Medicare? Thanks you everyone!
2007-07-15 13:35:45 · update #1
Roughly ; if I'm making $28,000 a year- my boss is paying ONLY their required half of FICA. I'll be required for the other half, as well as fed and state income tax...am I understanding this correctly? And can anyone give me a *very* rough estimate as to how much I can expect to be paying? Thank you all very much for your expertise!
2007-07-15 14:05:53 · update #2
If you haven't paid anything in as estimated taxes, then yes, you're going to have an impressive bill at tax time, plus penalties for underwithholding - you still have a couple quarters to get the money sent in.
You said she upped your hourly rate to cover her half of the ss and medicare - so that means you got it, not the IRS, so YOU are the one who will owe both halves to the IRS. That will amount to 15.3% of your net after expenses. This will be in addition to whatever income tax you owe. If you're single, no dependents, and not much in the way of deductible expenses, your tax bill could be around $6700 to the feds for income tax, ss and medicare - that doesn't include anything you might owe to your state or municipality if they also have income taxes.
If you use your cell phone in connection with your work, then you could deduct at least a portion of it. If it's the same cell you use for talking to friends, etc, then you would have to prorate it. Clothes, no, not deductible, unless you have to wear uniforms, which isn't exactly standard for a nanny. And travel expense - if part of your responsibility includes taking the kids to dance lessons, or wherever, then that mileage could be deducted.
Download form 1040ES and make estimated payments for the remaining two quarters to cover your anticipated federal taxes for the year. Check on your state - you might need to make estimated payments there also.
If you are working at the person's home that you are a nanny for, the way she's handling it (1099) is NOT correct or really allowed - she should be withholding taxes (income, ss and medicare) from your checks, and submitting the withholding plus her half of ss and medicare to the IRS, and withholding to the state.
2007-07-15 15:08:26 · answer #1 · answered by Judy 7 · 3⤊ 0⤋
The 1099 means you are an independent contractor and therefore responsible for ALL taxes. You can deduct certain expenses. You need to contact a CPA or a good tax person now for specific advice. Waiting until the end of the year could cost you in taxes and possible penalties for not paying quarterly to the IRS. Please look into The Fair Tax. If we can get this legislation passed in congress, it will eliminate all federal income taxes and replace it with a national sales tax. Not only will you get to keep all you earn, but you decide how much tax you will pay based on what you buy. The sales tax is only on new items. Please look at fairtax.org or flfairtax.org and consider joining a local organization. I am in Nassau Co, Fl, we will meet this Sat at 9am at the Fernandina Police station on Lime street. Good luck! Ken
2007-07-15 13:31:24 · answer #2 · answered by Ken M 1 · 0⤊ 0⤋
Nanny 1099
2016-11-13 04:20:21 · answer #3 · answered by Anonymous · 0⤊ 0⤋
You will be subject to Social Security and Medicare tax at the end of the year at a rate of 15.3% of you taxable income. That amount is in addition to the income tax you will be subject to. You may be able to take a expense deduction for the items you mentioned and several others. There may be some question about the employer paying you as an independent contractor(1099) but if that is legit the deductions are OK.
2007-07-15 12:56:29 · answer #4 · answered by ? 6 · 1⤊ 1⤋
I was a nanny too, 16 years ago, and they took care of all the taxes properly. You are not getting proper tax withheld. Also if she is not taking all social security out then you may get charged fees. They are to be paid quartly. You need to discuss with an accountant on how this needs to be done. ANd YES you will be having to pay federal income taxes at the end of the year. But if she increased pay to help cover your social security then you will be charged more for federal taxes. It will just show as income unless she does not report it, which is illegal. No you cannot deduct travel unless you have receipts and they are job related. Like driving kids to school with your own car. If they are requiring you to pay for gas to drive their car but for errands for them ....they need to give you gas allowance as well. Sounds like maybe you may be getting unfair treatment and taken advantage of. If you went through an agency, contact them and inquire about the salary and tax and how it should be done.
Best wishes
2007-07-15 15:29:39 · answer #5 · answered by shello 3 · 0⤊ 0⤋
Your employer is doing things wrong. Either you are an employee and should have BOTH social security AND federal income tax withheld, or you are an independent contractor and should not have either withheld. Neither of you can have it both ways. That said, if taxes are not being withheld, you should be making quarterly estimated payments. As is stands, you are likely to owe underpayment penalties on top of your actual taxes. I recommend consulting a tax professional ASAP.
2007-07-15 14:16:14 · answer #6 · answered by STEVEN F 7 · 0⤊ 0⤋
You have to pay for everything. If you are considered as an independent contractor, you need to pay double FICA.
2007-07-15 13:58:00 · answer #7 · answered by Lin H 2 · 0⤊ 0⤋
Save 25% for tax and hope it isn't more.
2007-07-15 12:54:10 · answer #8 · answered by William R 7 · 0⤊ 0⤋