do i have to pay my tax?

Question

i work at a spa. and i get a payroll check of 100 a week. i am also a student in college. do i have to pay alot of tax back because it does not get deducted from my payroll check. or am i eligible to even gain more money back?

Answer 1

If taxes are not being withheld from your pay you are being treated as Self Employed. That may or may not be the correct treatment. Most folks who are treated as independent contractors are in fact employees.

If you are Self Employed, you must file if your income exceeds $400 in any tax year. You must pay the Self Employment tax, at 15.3% of 92.35% of your net income. If you earned $5,000 in 2007, that will work out to about $706 that you'll have to pay. With that income you won't owe any income tax, but that SE tax MUST be paid.

However, you should first get a determination from the IRS as to whether you are an employee or not. Get a copy of Form SS-8 from the IRS website, fill it out, and file it. It will take a couple of months to work its way through the system so you have plenty of time before the April filing deadline if you get moving on it now.

If the IRS determines that you're an employee, your employer will send you a Form W-2 instead of a 1099. You'll still have to pay the Social Security and Medicare tax that he did not withhold. File Form 8919 with your Form 1040 tax return and mark Reason Code 'A' as the reason for filing the form. The tax on $5,000 works out to about $383 which you will have to pay, but it's a lot less than the $706 you'd otherwise have to pay.