My employer doesn't withhold taxes, how do I know how much to save for taxes?

Question

I'm considering a contract job that has a W-9 form that I sign. How do I know how much to save to pay taxes? I'm married, filing jointly.

Answer 1

About 1/3

Answer 2

It depends on your joint income which will determine your tax bracket.  In addition to whatever your income tax is, you'll owe around 14% for self employment tax for social security and medicare.  Probably total of 30-40% for federal, plus whatever your state tax is.

Answer 3

about:

federal income tax 10%

social security and tax 15%

state employment taxes

unemployment tax 5 to 6%

in general your total tax burden state and federal, being self employed will amount to about 40% percent of gross income

Answer 4

I have no way of knowing your income bracket, but if you and your husband itemize your deductions I would assume you don't pay the full tax rate.

If you itemize I would think 18% would be enough.

If you do not itemize 25% may be closer, but again your income bracket has a lot to do with this.

One thing you need to consider is whether you are required to pay quarterly estimated taxes.

The IRS requires the self employed ant most others who do not pay taxes be payroll deduction to pay an estimated tax quarterly. Those who do no pay quarterly are subject to tax penelty when they do file.

You should look into this.

Estimated taxes are paid by submitting ES 1040 every 3 months (April, July, september and January.).

If you find you have to pay this you can file ES 1040 and send in 15-20% of your income for that 3 month period.

Hope this helps.

Answer 5

All depends on the amount of money you intend to make for 2008.  You have to earn over $8,500, before any income will be taxed.  Most young people will get a refund, if their employer deducted any federal taxes.

A good rule is to save about 10 to 15 percent of money earned over $8,500.

Also, you should find out if your employer will match your social security tax.  If not, you will be paying about15% extra  for that on total income under $108.000..  See my reference below.

Or, you can go to irs.gov, see my reference, and you can use their calculator to figure out what you'd owe with your expected 2008 income, and deductions for dependents and such.

Answer 6

you can go to irs.gov, see my reference, and you can use their calculator to figure out what you'd owe with your expected 2008 income, and deductions for dependents and such.

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Answer 7

About 25%.  If you take a job as a contracator you will be considered self employed , and have to pay the self employment tax (goes to your social security & medicare.)  You will be able to deduct any expenses that you incur during your job.  Mileage, travel expenses, meals while you are on the road, any supplies that you purchase, etc.  Just keep good receipts.

Answer 8

Hi,

For Federal Taxes you can go to  www.irs.gov  

you can go under the self-employed section or go to Publication 15 under businesses, scroll thru the table of contents and look for withholding.  They have a chart that will show you how much should be withheld depending on pay period and number of deductions.  It's boring but pretty easy reading.

You will have to file estimated taxes and don't forget that you will also be required to pay social security and medicare taxes (both the employer and employee portions) which is a total of 15.3% of your pay (7.65 for the employee portion and 7.65 for the employer portion)

If you live in a state that has state income tax your state web site should also have a section for either small business or self employed that should give you a schedule of withholding amounts.

Neither is hard to do, you may not be required to send estimated tax payments, it depends on how much you'll make over the term of the contract.

Just remember that the employer saves not only the employers portion of the social security and medicare taxes, but also federal and state umemployment taxes.

So make sure you're getting paid sufficiently.

Good Luck