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Is there a certain amount of money I should be setting aside?
If you are in business for yourself, or carry on a trade or business as a sole proprietor or an independent contractor, you generally would consider yourself self-employed and you would file Schedule C or Schedule C-EZ with your Form 1040.If you are self-employed you must pay Self-Employment Tax.Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.
Well, I don't necessarily work for myself. What happened was, I was hired on by a doctor who owns a wellness center. He told me I would be in charge of taking out my own taxes and had me fill out a 1099
I just assumed that made me an independent contractor, but I have no idea what I am suppose to be doing
He pays me every wednesday, but I do not have anything taken out of the check. Just a check from his wellness center without taxes taken out
Then you are self employed. The earnings from the work will be shown on the 1099MISC form for you by the doctor and then you will file a Shcedule C and SE Form for the self employment taxes.
Sometimes, it will be a really small amount because I am just starting, I sometimes only have 1 client a week
You will be able to subtract all your expenses so keep track of every dime you spend in the course of this work.
when will I file a schedule C or SE form
It will be filed with your regular return
I am not sure though just how much I should take out of each check, because I don't want to at the end of the year be told I owe a certain amount, yet I never prepared by never taking out money
is there a certain percentage I should be taking out of the check?
What you need to do now is go back and add up the income and look at any expenses you had. Subtract those and then I calculate the additional tax if any. I will send you a the SE to look at
I didn't have any expenses, because the owner has purchased anything materials I needed.
I don't know how much tax is taken out of each check or how much should be
Did he drive you to the office? Then you have mileage
So I have no idea how to prepare myself for the end of year
No, I drove myself. But how would I show something like that to prove I used my own gas
Do I need to save my gas receipts or is there a good faith agreement
First you need to get the correct amount that will be taxable to you. How much have you gotten thus far?
Not much at all, so far total I probably have about 1000 that I have mad
The mileage amount would most probably serve you better.
How do I show my mileage
or do I just tell them at the end of the year?
Not so much. The mileage can reduce it even more.
SE will be calculated on all SE income over $400
I know, but how do I prove I used that many miles.
and what does SE mean
A calendar showing the days you went there with the miles (both ways) will do. IRS says "do you have proof and is it written"A calendar would prove both those. So go back and get that together.
The self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).
After you look at the mileage and the income you may see that you made nothing, but you still have to file the information because the 1099MISC will be sent in so the doctor can subtract that amount from his/her income.
ok, so with each pay check, I should take out 15.3% and put that aside for when taxes are due?
The amount is only on the total that is earnings (after expenses)
I understand that, but I want to prepare for how much I am going to ow
I know it seems like a lot to keep track of but it will serve you in the end
Maybe nothing extra.
So I want to start taking a certain amount every time I get a check, so I don't get kicked in the ass in the end and told I owe a few grand to the IRS and don't have the money
Ok, So what I should do is not take anything out of any of my checks, and keep a calendar of how many miles I drove to work and show that to the tax people when my taxes are done?
Then I must advise you to do a little calculations first and then you can multiply the percentages to see what you should send in (if any).
Beginning on Jan. 1, 2010, the standard mileage rates for the use of a car (also vans, pickups or panel trucks) will be:
thats not bad
but I just am so confused on the paychecks I get
I feel like I am ignoring paying my taxes on them and I feel like I should have something taken out of each one
Yes go back and fill out the calendar. Your tax person will know how to apply it to the return and they can fill out the SE for you. After looking at your info they can also advise how much you should send in for 2011 taxes as estimated payments.
Ok, so I should just go to a tax person and show them all my paystubs
I know you are confused. The system is set up on a pay as you go for taxes. When you do not have withholding you can make estimated payments but until you know what you are making and howmuch of that is taxable you really do not want to just send your money in
and they can tell me what I should be doing?
You will get a 1099MISC so show them that also
well I dont want to send in money, I just wanted to start a separate savings account and put a little money aside in it
but I dont know how much I should but in that separate savings account
I never got any paperwork from the doctor I work for. I just signed a 1099 and never saw it again
Well then put aside 20%
That should cover you for the remaing and if you can get your expenses together then you should be covered for the state too
ok so set aside in my savings 20% of each check, and then keep track of all my expenses?
That would put you in a good place. I suspect it will be more than you need to if you keep track of everything.
Do you want a linl to a publication for expenses that you may be able to claim?
Minute while I load
Good luck I know you will do well.
thank you for the help