I know nothing about taxes and have to do them myself now! Help!?

Question

I am a nanny and get paid 14 and hour for 40-45 hours a week. I have to take my own taxes out. How much do I set aside then? Also, do I get any of that money back? I hear about tax returns, I am not sure how that works. I am a full time college grad student as well, I don't know if that makes a difference. I am also still under my dads insurance until I am no longer a full time student.

Answer 1

Depending on how your contract is structured, your employer may have to pay the employer portion of your social security and Medicare taxes.

There are 3 - 5 taxes you need to worry about.

1)  Social security - the government has a form you can fill out to help you determine if you must pay both portions of your social security tax - http://www.irs.gov/pub/irs-pdf/fss8.pdf

2)  Medicare - use the aforementioned form for the Medicare tax as well.

3)  State unemployment taxes - See your individual state for details.

4)  Federal Income Tax - If you purchase a tax package like Turbo Tax, they will ask you questions and help you complete your taxes.

5)  State and Local Income Tax - the same turbo tax (or tax cut) software packages will also determine any liability you have for state and local income taxes.

Remember, if you're self employed, then any expense that you have towards your employment may be deductible.  This includes vehicle expense, tax software, a special uniform and cleaning of that uniform if required, and lots of other deductions.

This cannot have the granularity you will eventually require, but should put you on a firm path to sort out your tax situation.

Answer 2

You are self employed. Read more about self employed tax filing: http://taxipay.blogspot.com/2008/04/tax-...

Answer 3

I personally would visit the IRS website and use the Withholding calculator to find out how much should be withheld each pay check and pull that money aside when i received my paycheck, so when i filed my income tax i would be able to full pay the amount owed.

Answer 4

You say you are a nanny, which implys that you work in your employers home.  If this is true then you are an employee, and your employer must withhold social security, medicare, and income taxes and report them on Schedule H http://www.irs.gov/pub/irs-pdf/f1040sh.p... on their personal return.  Your employer might not be aware of this and you should bring it to their attention.  

Even if your employer doesn't withhold taxes, it is still your responsibility to report your income and pay your taxes.  You can file form SS8 with your return to have IRS make a determination about your status (employee or independent contractor).

Your income is probably low enough that you can have IRS prepare your return for you at the closest IRS office.

Be proactive now or you will get an unpleasant surprise come tax time.

Answer 5

You need to seek the advice of a tax professional.  You have a number of issues that should not be randomly handled with out a clear understanding of all of your circumstances.  Not the least of which is that your "employer" is very likely violating a number of labor and tax laws.