Paying Taxes?

Question

I might be starting a new job where the employer does not take taxes out of my check. How do I go about paying my taxes on this income? Can I take it to the IRS office and say this is income I've made but need to pay taxes, how much will it be? I would like to pay the taxes before I spend the money so I don't have to pay a whole bunch later at one time. Basically how do I pay those taxes right away instead of waiting until the end of the year and paying a lump sum. Also I don't think I will be filing a W-4 with them what do I do as far as that? Thanks

Answer 1

Sounds like you'll have to make quarterly estimated tax payments to the IRS. Read the instructions for IRS Form 1040-ES for how to do so, deadlines, etc.: http://www.irs.gov/pub/irs-pdf/f1040es.pdf

You didn't mention which state you're in. If there is income tax of wages in your state, you probably will need to make quarterly estimated tax payments to your state's department of revenue too.

Answer 2

You estimate your taxes using Form 1040 ES and similar state forms and make quarterly payments. You might consider setting up a special savings account to set aside money more frequently. Paying both halves of social security can be a killer for small time independent contractors so make sure you know what you are doing.

There are frequent questions on this board by people who are being treated as independent contractors but seem totally clueless about the difference. Pardon the flaming, but you seem like one of them!

You should also ask yourself if you should really be treated as an employee or are you being abused so the employer can save on employment taxes, workers compensation and benefits.

Do you have set hours like an employee?
Do you have set hourly pay and if you do, is it significantly higher than what an employee would get or about the same?
Do you use the employers facilities and equipment?
Who pays medical bills if you get hurt on the job?
Except for "significantly higher pay" a yes indicates employee not independent contractor.

Can you freely offer your services to anybody else?
Do you have significant out of pocket expenses?
Do you have special skills and the right to control how and when you get the work done?
Is your worker status customary in the trade?
Do you have the potential for profit or loss based on your management abilities.
Yes indicates self employed.

Answer 3

No, you won't fill out a W-4 - they might have you fill out a W-9 so they have the info needed for a 1099 form for you at the end of the year. But either way, you are still responsible for paying your taxes. You'll have to pay them quarterly, with a 1040ES form. If you just take your info to an IRS office, they might help you with the 1040ES - it would be a good idea to call ahead and see if you can make an appointment. Or take your info to a CPA.

Answer 4

If you are an independent contractor (no withholding by the folks paying you) you should make estimated tax payments on a quarterly bases. You do so with a 1040ES (link attached). There may be some question about your status since you used the words, job and employer, which do not apply if you are an independent contractor (none-employee).
http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Answer 5

If you want to learn how you can LEGALLY reduce your tax burden (this applies to all forms of taxation at all levels of government) you’ll know where to find me.