How much do I have to pay to IRS?

Question

I work as a contractor and i make $3200 a month, by the end of this year my total income will be almost $32000, how much do I have to pay to IRS? I'm a new Immigrant and this is my first year in the US. I also would like to know what kind of deducition I can put when I fill up the taxes.

PS: I'm also a college student, and I have a rent for $900/month

I have been told that I'm 1099, I don't know what's that!!!

Answer 1

The rent amount means nothing, unless there is some home office expense. If you're a college student, some out-of-pocket monies can come into play. Self-employment tax on 32k is $4896. As a self-employed contractor, there are many expenses to reduce your taxable income, but assuming just standard deduction (single) and personal exemption (1) income tax on the remainder is $3841 for a total tax burden of $8737. Get all your papers, receipts to a tax professional, the cost of their services will save you a lot of headaches in the future, and even find you some great deductions. Welcome to America!

Answer 2

Are you really a contractor or is your employer ripping you off?

I have canned explanation to apparently clueless independent contractors:

Some employers try to get around paying employment taxes (social security and unemployment) and other employee benefits like workers compensation insurance by improperly classifying employees as independent contractors. The basic issue is the amount of control the employer has over the worker. If you are required to show up for work--personally--at a particular time, punch the clock, use the employers equipment and are paid an hourly rate, you are an employee. If you didn't understand the difference when you posed your question, I would be even more convinced that you are an employee. What is your preference, Slotted or Phillips? Complete an IRS Form SS-8 to get an official ruling on your status. This will help you get unemployment if you get fired. When you file your income tax return, you can attach Form 8919 Uncollected Social Security and Medicare Tax on Wages and only pay the employer's half of social security. You will still have to cough up all the income tax.

Answer 3

1. You are independent contractor. With your tax return Form 1040, you will need to file Schedule C (Form 1040): Profit and Loss from Business (Sole Proprietorship). You will report your income and expenses on schedule C. You can deduct your work related expenses. Let us assume your net income is $30,000 ($2,000 as deductions).

2. You will also file Form 1040 (Schedule SE). . On your net income from self-employment (that is from schedule C) you pay 15.3% employment taxes. For this you use schedule SE.
On $30,000 the SE tax is $4,590.

3. For federal tax your deduction is $8,750 (for single). Your taxable income is $21,250. Your federal tax is $2,796..

4. Then you may have to pay State income tax (depends upon your state).

5. You must file your tax return Form 1040 before April 15, 2008 and pay all the taxes.

6. For 2008 you must make quarterly payments for the estimated tax.

Answer 4

If you are single, your income tax on $32K would be a little over $3000. In addition you'll owe self-employment tax, which is for social security and medicare - that's another $4500 or so. You were required to make quarterly payments based on your income, and pay in what you expected to owe for each quarter. There is one more quarterly payment deadline for 2007 taxes - it's January 15,2008 for the fourth quarter. You'd be wise to pay in pretty close to what you'll owe by then. Fill out form 1040ES (you can download it at irs.gov) and send it with your payment, by January 15.

Answer 5

You get personal exemptions to take off your income for yourself, spouse and children you can also deduct for expenses if they directly relate to your contracting income. (save your receipts)

If you are thinking about doing the paperwork yourself:
You might want to get an early start by filling out the tax forms in advance so you are familiar with the form and instructions. They can bve confusing but are easier to fill out than they were 20 years ago.


http://www.irs.gov/pub/irs-pdf/i1040.pdf instructions
http://www.irs.gov/pub/irs-pdf/f1040.pdf main form