What do I do about taxes if employed as an independent consultant / contractor?

Question

A larger corporation is hiring me to do a flat fee based consulting project. Will they withhold fed/state taxes or will I have to file that when tax season comes?

I do not own a small business.

Thanks!

Thanks for the replies....does a 1099 apply here?

This is a 1 time consulting project.

Answer 1

No, they won't take out taxes - you'll have to deal with that yourself. You will probably get a 1099 from the company, but whether you do or not, the procedure for paying taxes is the same. You'll show the income and any associated expenses on a schedule C (or you can probably use a C-EZ), then take the net from that over to a schedule SE to calculate your self-employment tax for social security and medicare. The numbers from the bottom of the two schedules will transfer to your 1040. You'll also put any other income you have on the 1040, then figure your tax amount.

Answer 2

A generic contractor takes a activity, like development a house. They hire subcontractors for particular activity like roofing. the two are contractors and pay all the taxes the two halves of FICA and earnings tax quarterly. A contractor who works for a business company isn't an worker they're self employed. The business company proprietor can no longer set their hours or tell them how or while to paintings. So in case you're employed say for a roofing business company as a contractor you're in basic terms given paintings and you will do it your self or hire subcontractors. As a roof artisan you ought to hire your very own team, grant your very own transportation to the roles. if what you're advertising company says you'll be at a table set hours you're an worker, otherwise they might have each physique be contractors so as that they did no longer could desire to pay unemployment, workers comp, paid holidays, ill leave, or FICA or manage payroll taxes in any respect. A contractor owns their very own business company so takes the gross earnings and deducts the business company costs on the tax return. For tax purposes a contractor or sub contractor are the comparable.

Answer 3

If you have any doubts at all, hire an accountant. That way you have an expert to represent you should you get audited.

My husband is an independent contractor. It’s costing us about $200 ($250 maybe) for the year to have an accountant prepare his quarterly statements and to do our taxes next year. It’s a small price to pay for piece of mind that our taxes are done right or it’s someone else’s fault.

Answer 4

You should get a 1099 for the work you do. They probably won't withhold taxes unless you make that request. You will probably have to file a schedule C on your federal income tax return. It is WRONG to assume your tax accountant is responsible for errors on your tax return. A tax accountant might represent you in the case there are any questions but make no mistake - the person whose name is on that tax return is soley responsible for the information on that tax return.

Here is an IRS link that might help.

http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Answer 5

You file your own quarterly tax return. Keep track of all your expenses that you can deduct. You will have to pay all your own taxes including both parts of social security. Be sure your fee will cover all this and still give you the profit that you want.

Answer 6

If you get paid on a 10-99 form which is what most contractors get, you have to pay your own taxes and you should file quarterly, not annually.