question about paying your own taxes?

Question

I just started a job where i have to pay my own taxes, where is the best place to go to have them filed and also, do i have to go in more than once a year? How much should i set aside for each paycheck for taxes? are there any breaks for people who work for themselves?

Answer 1

Well, you can still do your own tax return, you can go to a chain tax preparer (H&R Block, Jackson Hewitt), find a local cpa/tax preparer. No, you don't have to go more than once a year. As far as setting aside money for taxes, since you work for yourself you don't get a paycheck. What you need to do is pay quarterly estimated taxes, which are due 4/15, 6/15, 9/15, and 1/15 of the following year. The irs says that to avoid any penalties, they let you pay either 100% of your prior year tax (110% for hi income persons), or 90% of your current year tax (which you obviously don't know until after the year is over). That doesn't mean that you won't any taxes on 4/15, but at least you won't owe any penalties. Working for yourself, you will have to pay the regular income tax, as well as paying self-employment (SE) tax, which is 15.3% of 92.35% of your self-employment income. As far as breaks go for people who work for themself, the only real break I can think of is that you get to deduct health insurance for yourself right on page 1 of form 1040, instead of on Schedule A of itemized deductions.

Answer 2

Okay after reading the first two answers I am gonna tell you the real answer. I have been doing taxes and bookkeeping for almost 20 years,

First the form that couldn't be remembered is a 1040-es. And yes she was right if you can figure your tax by yourself you don't need anyone else.

The first answer was technically correct but right out of the IRS text. But, it left out the fact that if you don't owe more than a $1000 in tax there is no penalty. He also didn't mention that you get to deduct any business expenses that you have to determine the net income.

You didn't mention what type of job it is...so there are questions hanging still. For example...if you work at home and have a space devoted only for your work space you can take a deduction for that. But, for some reason my gut tells me this isn't the case. If I had more details I could help more.

But, let me put this on the table for you to think about. If you are working in a job that usually isn't a contractor...then your employer is probably doing something illegal. And the way it effects you is that he/she is making you pay part of the their expense. If this is the case and you aren't making a lot more than a normal employee would ...you need to rethink it.

Because as a contractor you aren't even covered under Workman's Comp. which means you would have to sue if you got hurt at work. And, you will not be able to draw unemployment.

Oh, did I mention that there are 24 tests to determine if you are actually an employee or a contractor? The most important ones are if there is any other person that is an employee that does the same thing you do combined with if they tell you when you have to work and how you have to do the job.

If they do any of these things you are more than likely not a contractor...your an employee!

And, they are just trying to screw you out of benefits.


I hope this helps.

Answer 3

You can do them yourself or go to any tax preparer.

Since you will probably have over $1000 in tax liability for the year (for income tax and self-employment tax) you'll need to file a quarterly estimated return and pay the taxes you estimate will be owed for your income that quarter. The deadlines for the first two quarters are already past, but you'd just pick up with quarter 3 - it's due September 15. The last quarterly return and payment are due on January 15, 2008.

The amount you have to set aside depends on your total income for the year, your filing status, dependents, and deductions, and where you live, so it's real hard to say what you should set aside. At a minimum, you'll owe around 15% for self-employment tax (social security and medicare) - you'll have to pay what would normally be deducted from your paychecks, plus the employer matching amount.

If you are in a job where they don't withhold taxes, you are considered an independent contractor and that you ARE working for yourself. The break you get for that is that if you have allowable business expenses to earn the money, you can deduct those expenses from your income (whether you itemize or not) before your taxes are figured.

You'll probably need to set aside around 1/4 to 1/3 of your income for taxes, but it could be less or more than that depending on the things listed above.

Answer 4

You dont go to anyone. You mail them in or pay online. Go to IRS.gov and search for self-employment taxes. I cant think of the name of the voucher to pay your taxes. You make quarterly payments usually. Try to put in as much as you think you will owe, put in as much as you paid last year (to avoid penalty). You could see a CPA to help determine how much you need to pay.