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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 13153
Experience:  15years with H & R Block. Divisional leader, Instructor
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I am working as a contract laborer. My boss is taking 20 0/0

Customer Question

I am working as a contract laborer. My boss is taking 20 0/0 of my wages for taxes but giving me no reciepts as to what I have made or paid in. I need to know what the normal percentage of withholding is and what it goes to. Also when I file my income taxes what will I need for proof of income and what I have paid in. Also I have expenses to write off. Will I be able to do that under contract labor?
Submitted: 6 years ago.
Category: Tax
Expert:  Robin D. replied 6 years ago.

Hello and thank you for using Just Answer.

Withholding is made by employers for Federal Income, Social Security, and Medicare taxes. States also have withholding but since you are in Texas with no state income tax we will stick to federal payments.

The general rule is that an individual is an independent contractor if (the person for whom the services are performed) has the right to control or direct only the result of the work, and not what will be done and how it will be done or method of accomplishing the result.

People such as lawyers, contractors, subcontractors, public stenographers, and auctioneers who follow an independent trade, business, or profession in which they offer their services to the public, are generally not employees. However, whether such people are employees or independent contractors depends on the facts in each case. The earnings of a person who is working as an independent contractor are subject to Self-Employment (SE) tax. The person employing the services of Independent contractors are not required to withhold any amounts form the pay and will report the amounts paid on Form 1099MISC.


If you are an employee then you should receive a W2 from your employer at the beginning of the following year. You should also be given a statement with each check showing how much was withheld for the federal taxes (it should list Federal taxes and most probably FICA as the Social Security and Medicare but may show the SS and Medicare separately).


If you are not an employee then you will file Schedule C showing all your income and expenses. If you are an employee then you can show your expenses using Schedule A and it will be limited to 2% of your Adjusted Gross Income. This means that as an employee if your expenses are $5000 and 2% of your Adjusted Gross Income is $4000, you will only be allowed a deduction of $1000, the amount over the 2% AGI amount.


Speak with the payroll department and find out if you are an employee. If you are not then you need to be tracking your expenses (keeping receipts) and no withholding is necessary.


I sincerely XXXXX XXXXX information is helpful,

Customer: replied 6 years ago.
What is the normal percentage to be withheld? Is 20 percent the correct amount for Texas?
Expert:  Robin D. replied 6 years ago.
The amount to be withheld is based on the income of the employee during each pay period.