First of all - we need to clarify if you are an employee or a self-employed contractor.
If you are an employee - your employer is REQUIRED to withhold taxes.
If you are a self-employed contractor - you are considered as running your own business - and that would be your responsibility to pay taxes.
First of all - regarding your status as an employee vs self-employed contractor.
Regardless of what your contract states - that is determined by the law.
Facts that provide evidence of the degree of control and independence fall into three categories:
1.Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2.Financial: Are the business aspects of the worker s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3.Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?
Businesses must weigh all these factors when determining whether a worker is an employee or independent contractor. Some factors may indicate that the worker is an employee, while other factors indicate that the worker is an independent contractor.
There is no magic or set number of factors that makes the worker an employee or an independent contractor, and no one factor stands alone in making this determination. Also, factors which are relevant in one situation may not be relevant in another.
If, after reviewing the three categories of evidence, it is still unclear whether you are an employee or an independent contractor, Form SS8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding -
- can be filed with the IRS.The form may be filed by either the business or the worker.
The IRS will review the facts and circumstances and officially determine the worker s status.
Be aware that it can take at least six months to get a determination.
Another issue is related to your compensation...
If you are a self-employed contractor - the compensation is a civil matter between you and the payer.If you are an employee - in additional you are protected by the labor law - and may file a formal complain w the Labor department in your state government. In this case - the generally the amount of compensation stated in your contract should be your gross pay before any mandatory withholding.