I need to find out how much to save up to pay at tax time if my new employer isn't withholding any taxes?

Question

Basically, I know I need to pay taxes at tax time, but I want to plan ahead to be able to save for it, so I'm not screwed when tax time comes. I need to find out both federal and state (Arizona). My total income is going to be approximately $28,000 with $3,000 of that being the non-taxed part of it, and the other $25,000 taxed already.

Answer 1

The $3,000 well be taxes at the same rate as the other, you also need to figure 15.3% additional for self-employment. That's 459.00. I'm assuming no expenses to earning that additional 3,000 and assuming that your regular pay is taxed at 15% ( I get by assuming you're single, no dependants). So 15% of 3000 is 450.00 add 459 self-employment for a total of $909.00... A lot of assumptions here, so check with your tax specialist.
Oh, Arizona is going to want their 3.04% too, so add $ 91.20 for the state.

Answer 2

Why isn't your employer withholding taxes? Are you being misclassified and will get hit with a big bill you can't pay come next April

I have a 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. IRS and the states are stepping up enforcement in the abuse area.

Answer 3

Figure around 1/3 of the $3000 that hasn't had anything withheld, and you won't be far off. Most of that will be federal, about 15% for income tax and 15% for self-employment tax (for social security and medicare).

Answer 4

In general, figure 23%.... or 25% for a rounf figure to cover Fed, SS and Medicare.

Of course all this will be moot when the FairTax Act H.R. 25 passes and replaces all income taxes with a single sales tax on new items. The FairTax now has the support of hundreds of thousands, 72 congressional sponsors / co-sponsors, and 7 presidential candidates. See www.fairtax.org
Fundamentals and facts http://www.fairtax.org/PDF/FairTax-Fundamentals_and_facts-070122.pdf
Frequently Asked Questions about the FairTax http://www.fairtax.org/site/PageServer?pagename=about_faq