New US Resident Need Tax Advice?

Question

I just got my US Permanent Resident card - got myself 1 full-time job and 2 part-time jobs (as independent contractor). Will each of my employer withhold Federal & State tax? Will each of them withold Social Security & Medicare?

If yes, is there a chance that they might "over-withold"? And if so, will refunds be difficult? I am just starting out in the US and I have been searching website after website and could not find a simple website for one with limited financial understanding.

Help!! And thanks in advance to all!

Answer 1

1. On your full time job, your employer will withhold taxes. For this you must have filed form W4. The purpose of W4 is to tell your employer how much you want them to withhold for federal and state taxes. In January 2008, your employer will give you W2, which will have your total income and taxes withheld.

2. for independent contractor job, no taxes are withheld by your employer. In January 2008, your employer will give you 1099 (some employers only if your income is more than $600). For this income you can deduct your expenses related to this job.
This income is subject to SE tax at 15.3%.

3. On your total income you will pay federal income tax and state income tax.

4. Since this is your first year, you need not worry about making estimated tax payments. Make sure to file your tax return before April 15, 2008.

5. If you file electronically and opt for direct deposit to your account, you will get refund within 10 days of filing. If you opt for paper check, add one week. If you file paper return, add one week.

Answer 2

Jobs as independent contractor won't withhold taxes - you'll have to pay them directly to the IRS. For social security and medicare, you'll pay both the employee tax and the employer match, so you'll pay about twice the rate as you'd pay as an employee.

If you had two jobs as an employee so both employers withheld social security and that resulted in over-withholding, or if your income tax amount was over-withheld, you'd get the extra refunded to you when you file your tax return early the following year - it's common, and wouldn't be a problem.

Welcome to the US, and good luck. You sound like a hard worker - the type of person the US needs.

Answer 3

Taxes are intimidating, but really not that hard.

State tax, Social Security, & Medicare are automatically withheld if you filled out a tax form when you first started your job. I'm not sure if it is different for the independent contractor jobs. On that form you noted whether or not you wanted federal taxes withheld.
~If you marked "exempt" then they do not withhold any federal taxes and you NEED to file your taxes come April or the IRS will charge you plus interest.
~If there are taxes being withheld you still need to do your taxes because there is a chance they haven't taken out enough so you could owe more OR they could take out more than you owe and that would mean you get a refund.
Refunds are not difficult, it just takes time.
At the University I attend (Brigham Young University) they offer free tax help. I think they even offer it to people who are not local. There's information at: http://vita.byu.edu/faxfile.htm Or ask around your community.

Your employer will mail you your W-2 at the end of the year, which is the form that gives you all the numbers you need to do your taxes, at least for that employer.

If you are an independent contractor, it might be beneficial to Itemize your deductions.

The IRS website is also helpful: http://www.irs.gov/

Here's an equation you can use to figure out if you owe taxes (a positive answer) or if you qualify for a refund (a negative answer)

Gross Income
- Adjustments to income
---------------------------------
= Adjusted Gross Income
- Deductions to income (Standard or Itemized)
- Personal Exemptions (It was $3,300 per person in 2006)
---------------------------------
= Taxable Income
x Tax Rate(s)
-------------------------
= Tax Liability (How much you owe)
- Tax Credits (Tax already withheld, EIC, Child Tax Credit)
--------------------------------------------------------------------------------
= Tax Due (+) or Tax Refund (-)


Gross Income = (this is not exhaustive)
Compensation for services (fees, commissions, fringe benefits)
Taxable interest income (investments)
Ordinary dividends (taxed @ lower rate)
Net capital gains
Taxable gain on sale of residence
Taxable refunds, credits, or offsets of state & local taxes
Unemployment compensation
Net gambling & lottery winnings
Employee productivity awards or prizes

Adjustments = (also not exhaustive)
Retirement savings (Qualified IRA deposits etc.)
Student loan interest deduction
Amounts owed to you that you cannot collect
Medical savings account deduction
Moving expenses
One-half of self-employment taxes
Self-employment health insurance premiums
Alimony paid

Deductions = (#s from 2006 will be slightly higher for 2007)
Single Filer = $5,150
Head of Household = $7,550
Married Filing Jointly = $10,300
Married Filing Separately = $5.150
Also:
Qualified home mortgage interest for 1st & 2nd homes
Real estate taxes
Property taxes
State sales taxes paid or state and local income taxes (not both)
Other taxes
Charitable contributions
Interest on loans for investment and business
Unrecovered cost of pension
Non-business casualty and theft losses

Then you multiply the Taxable Income by the tax rate.
These are the rates for 2006
$0 - $15,100 at 10% (x .10)
$15,100 - $61,300 @ 15%
$61,300 - $123,700 @ 20%
and so on...

The 1040 is the U.S. Individual Income Tax Return. You fill that out to find out basically what the above equation gives you.
Schedule A is to figure out Itemized Deductions
and there are many more forms.

Hope that helps.

Answer 4

The employer on the full time job will withhold all taxes.
The employers on the part time jobs will not, as you have said that you are the independent contractor. He will give you a form 1099, listing all payments to you, and you will be responsible for paying taxes at the end of the year, or if you receive substantial monies each quarter, you should make quarterly payments.