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Invisiblesherm
sherman
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Registered: 10/02/03
Posts: 20,498
Loc: Euthanasia
tax help please, i think i'm geting screwed
    #3700761 - 01/30/05 02:44 AM (12 years, 6 months ago)

i worked all last year for a company and they did not take taxes out.
I was sent a 1099-MISC form.

The question I have is this.
what is the diference between what I would pay if I was a normal employee
or if is was an  independent contractor?

Does anyone here operate their own business?
What would be the reason to not take out taxes other than lazyness?
Are they trying to save money at my expense?

By the IRS definitiion
i am not an  independent contractor.

"You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done).
This applies even if you
are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed."

I found this also.

"The self-employment tax rate is 15.3 percent, with 12.4 percent allocated to the Social Security system and the other 2.9 percent going to Medicare. If you worked as an employee of a company, your employer would pay half, which means only 6.2 percent would be taken out of your wages for Social Security and 1.45 percent for Medicare. But as a self-employed individual, you are considered both the employer and the employee, which makes the entire self-employment tax burden yours. You do, however, get a tax deduction for one-half of the self-employed taxes paid as an above-the-line deduction to arrive at adjusted gross income."

It looks like they are trying to rape me

Does anyone know what i'm talking about?

thanks alot

oh yea, i put this in this forum
cause it says  "Come here to talk about politics, discuss legal issues "
i figured it was a lagal issue :laugh:


--------------------
shroomery.
not even once.



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Invisibleshobimono
Why?
Registered: 09/14/04
Posts: 560
Re: tax help please, i think i'm geting screwed [Re: sherm]
    #3700824 - 01/30/05 03:16 AM (12 years, 6 months ago)

You should go into the IRS and talk to them. I would do it sooner than later as it just gets busier as tax season approaches.
I highly recommend this because the IRS offers free tax help, h&r block and similar tax prep places will charge you, and unfortunately it sounds like you might be owing anywhere from a lot (ie employee) to a shitload (ie independant contractor). Since no taxes where taken out, it sounds like you might be writing checks to the feds, your state, social security/medicaid, and that is if you are an employee. If you are considered a contractor, as you mention above, the social security/medicaid payment will be double, and you might even have to write additional checks for unemployment.
Again, find a local IRS office and visit them, they will help you for free.
Good luck!


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InvisibleRandalFlagg
Stranger
Registered: 06/15/02
Posts: 15,608
Re: tax help please, i think i'm geting screwed [Re: sherm]
    #3701077 - 01/30/05 05:27 AM (12 years, 6 months ago)

I ran my own business for two years. I was required to make quarterly(every 3 months) tax estimate payments to the state and the IRS. It sucked. When you actually hold all of your money in your hand and then have to give about 30% of it away, it hurts. I still owe the fucking IRS and the Social Security Administration about $3,000. Pricks. I was making about $1600 a month and over $400 of that was taken away from me. With the amount of bureaucracy, tax, and hassle it took to run my business, I don't know if I would ever suggest being self-employed to anybody unless they have a very good idea and they are very good at what they do. The government just makes it too expensive and too difficult. I could tell you a million stories of how I waited on hold on the phone(long distance mind you) while waiting for some state corporation bureau, state tax bureau, or IRS person to come on the phone and give me incomplete or outright inaccurate information.

Bottom line, you are going to have to pony up some money. Either you will qualify as being employed by that company and you will have to pay your federal tax rate and half of your social security tax(your employer pays the other half) or you will have to pay your federal tax rate and all of your social security tax. If you earned a decent amount of money, you are fucked either way.

I would go talk to a CPA if I were you.

IRS = Vampires


Edited by RandalFlagg (01/30/05 05:35 AM)


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OfflineCatalysis
EtherealEngineer

Registered: 04/23/02
Posts: 1,742
Last seen: 9 years, 1 month
Re: tax help please, i think i'm geting screwed [Re: sherm]
    #3701130 - 01/30/05 05:41 AM (12 years, 6 months ago)

There is a huge difference in tax liabilities between an independent contractor and an employee.  I suck at tax and business stuff so thats about all i can tell you, lol  :smirk:


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Invisibleluvdemshrooms
Two inch dick..but it spins!?


Registered: 11/29/01
Posts: 34,211
Loc: Lost In Space
Re: tax help please, i think i'm geting screwed [Re: RandalFlagg]
    #3701960 - 01/30/05 12:56 PM (12 years, 6 months ago)

It's unfortunate that automatic with-holding ever came to be. If all had to make quarterly payments there would be quite the uproar over how much is actually taken.


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You cannot legislate the poor into prosperity by legislating the wealthy out of prosperity. What one person receives without working for another person must work for without receiving. The government cannot give to anybody anything that the government does not first take from somebody else. When half of the people get the idea that they do not have to work because the other half is going to take care of them and when the other half gets the idea that it does no good to work because somebody else is going to get what they work for that my dear friend is the beginning of the end of any nation. You cannot multiply wealth by dividing it. ~ Adrian Rogers


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Offlinezappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 1 year, 2 months
Re: tax help please, i think i'm geting screwed [Re: Catalysis]
    #3702010 - 01/30/05 01:10 PM (12 years, 6 months ago)

Depending on what you did for this company, they may very well have acted illegally in treating you as a subcontractor. More information would be helpful. Specificly, did they pay you by the hour and have the ability to assign various tasks and tell you how to perform them or did they give you a task, negotitate a price,(CAN be a time and materials rate, but that can get a little sticky) and give you freedom to accomplish that task in any way you saw fit. Did they require you to provide certificates of insurance for liability and compensation?

The advantages to the company in claiming you are a subcontractor are many. They avoid a lot of paperwork, government reports and record keeping. They also avoid paying for unemployment insurance (small money) and compensation (can be big money) and matching soc sec and medicare (half of the self employment tax). They can terminate the relationship at any time for any reason and generally have no obligation to you whatsoever.

The advantages to you are that you can charge more money (usually, if you're smart) and you can control it and generally make certain tax deductions for expenses that you otherwise wouldn't be able to take as a regular employee. The disadvantage for you is that you have to make sure you make your own quarterly contributions, keep better records, have no access to unemployment, and no recourse to workers comp unless you pay to cover yourself.

I have a very bad feeling that you may have gotten fucked by these people. You have to tell me what you did for them. You also may have some penalties to pay if you didn't make quarterly payments. The good thing is that if you should have been on the payroll you can report them to the IRS for illegal busines practices. You also learned something


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OfflineProsgeopax
Jaded, yethopeful?

Registered: 01/28/05
Posts: 1,258
Loc: Appearing at a mall near ...
Last seen: 11 years, 7 months
Re: tax help please, i think i'm geting screwed [Re: zappaisgod]
    #3702077 - 01/30/05 01:39 PM (12 years, 6 months ago)

Quote:

zappaisgod said:
You also may have some penalties to pay if you didn't make quarterly payments.



When I first started as a consultant, there were no penalties the first year for not making quarterlies. Your quarterly tributes to Rome on the Potomac are based on the previous year's tribute plus 10%. State law may be different (where I live the state policy mirrors the fed's).


--------------------
Money doesn't grow on trees, but deficits do grow under Bushes.

You can accept, reject, or examine and test any new idea that comes to you. The wise man chooses the third way.
- Tom Willhite

Disclaimer: I reserve the right to change my opinions should I become aware of additional facts, the falsification of information or different perspectives. Articles written by others which I post may not necessarily reflect my opinions in part or in whole, my opinions may be in direct opposition, the topic may be one on which I have yet to formulate an opinion or have doubts about, an article may be posted solely with the intent to stimulate discussion or contemplation.


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Offlinezappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 1 year, 2 months
Re: tax help please, i think i'm geting screwed [Re: Prosgeopax]
    #3702152 - 01/30/05 02:09 PM (12 years, 6 months ago)

My wife and I both make quarterly payments based upon our earnings in that quarter, with adjustments for expected deductions. The idea is to roughly have paid the expected tax by the last quarterly payment. There is no relationship whatsoever with what we paid the year before, as there is no relationship between the two years income. Regardless, everybody's situation is different and there are many factors which can determine what you should do. We have paid our share of penalties and if our income doubles and we only raise our payments by 10% we will have to pay them again.


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Invisiblesherm
sherman
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Registered: 10/02/03
Posts: 20,498
Loc: Euthanasia
Re: tax help please, i think i'm geting screwed [Re: zappaisgod]
    #3702231 - 01/30/05 02:49 PM (12 years, 6 months ago)

I am definitely not a sub-contractor
I get told what to do, how to do it, where to do it, and when to do it.
and i even get yelled at  :ooo:

So i guess i'm getting fucked.

Am i just getting charged double on the social security and medicare?

Are there any other charges I should look into?

Its my own mom and her husband that are triing to rape me.
I can make them pay it for me if it comes down to it.


--------------------
shroomery.
not even once.



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OfflineJesusChrist
Son Of God
Registered: 02/19/04
Posts: 1,459
Last seen: 4 years, 11 months
Re: tax help please, i think i'm geting screwed [Re: zappaisgod]
    #3702258 - 01/30/05 02:57 PM (12 years, 6 months ago)

You should be able to get out of any penalties if this is your first go round. I don't know what you do, but you also have to pay very close attention to what you can take as a tax deductions. You have more leeway as an independant contractor than as an employee.

You also have to realize what all of this costs and charge the company more money for your services to compensate for this.

I would think it would be a good idea to talk to a CPA. You could overlook some deductions that you cost you dearly, and that is what they can save you. A good CPA can also give you ideas and plans for ways to reduce your tax liability if you choose to continue your relationship with this company.

To anyone else that reads this, if you are getting a check instead of a paycheck (something that breaksdown taxes withheld), you need to know that you are probably in the same situtation. It really sucks that this snuck up on you. Paying the man is a bitch. Luvdem is right about withholding. If we all had to right a check at the end of each year, you would chase those bastards out of office so fast it would make your head spin.


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Tastes just like chicken


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Offlinezappaisgod
horrid asshole

Registered: 02/11/04
Posts: 81,741
Loc: Fractallife's gym
Last seen: 1 year, 2 months
Re: tax help please, i think i'm geting screwed [Re: JesusChrist]
    #3702358 - 01/30/05 03:31 PM (12 years, 6 months ago)

Are you dependant on them for your support? I mean do you live in their house rent free, do they feed you, do they pay your tuition, health insurance, etc.? Are you prepared to squeal on them to the IRS? Because they did do something illegal.


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Invisiblesherm
sherman
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Registered: 10/02/03
Posts: 20,498
Loc: Euthanasia
Re: tax help please, i think i'm geting screwed [Re: zappaisgod]
    #3702393 - 01/30/05 03:43 PM (12 years, 6 months ago)

nope, i'm not dependant on them.
I won't squeal on them, I've got them in a corner.
They're gonna pay.

Thanks for your help


--------------------
shroomery.
not even once.



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InvisibleYidakiMan
Stranger
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Registered: 09/29/02
Posts: 2,023
Re: tax help please, i think i'm geting screwed [Re: RandalFlagg]
    #3704473 - 01/30/05 11:21 PM (12 years, 6 months ago)

Why were you reporting $1600/month income? Such a small business can run for many years as a hobby and not pay any taxes.


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InvisibleRandalFlagg
Stranger
Registered: 06/15/02
Posts: 15,608
Re: tax help please, i think i'm geting screwed [Re: YidakiMan]
    #3704703 - 01/30/05 11:58 PM (12 years, 6 months ago)

I wanted to be above-board and legit. Little did I know all of the paperwork and taxes I would have to go through!


Edited by RandalFlagg (01/30/05 11:59 PM)


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