My mom,dad and I run a small business. Every quarter, we need to pay taxes on my earnings. (About $1000). My?

Question

My fiancee and I recently had a daughter, and I never changed my status to head of household. (I do claim this on my yearly income taxes though) Will I save money quarterly if I change my status? Since my mom and dad own it, I end up paying those taxes myself. What are the advantages/disadvantages to switching my status?

Answer 1

Changing your filing status will not effect how much your parents have to pay in employment tax. They are only supposed to be paying half of the SS and Medi-care. The filing status does not effect that. They are supposed to deducting half of the SS and Medi-care as well the withholding from your check.

If they aren't withholding that from your check it more than likely will be deemed additional compensation and would be taxable also.

Hope this helps.

Answer 2

That depends on a lot of other factors outside your desription.  Your best bet is to consult a tax accountant./

Answer 3

Assuming you are the parent claiming your daughter as a dependent, you can file as head of household IF she lives with you.  The head of household status will save you some in taxes, but claiming your daughter will save you even more.  You should calculate what your tax will be, and will likely be able to decrease your quarterly payments.

Answer 4

Read about the requirements for head of household: http://taxipay.blogspot.com/2008/05/head...

You can claim your daughter as dependent. Your exemption will increase by $3500 and you will get $1000 as child tax credit. This means that you will not owe any tax on your tax return.