WHAT will happen to me? with my tax situation?

Question

well im 19 and for the past 6 months ive been working in a spa as an "independent contractor", they never took taxes out of my pay, which i thought was a cool reason to work there, then another employee told me i have to pay about 20 percent of my check back at the end of the year! i dont have the money... and im sure i wont have the money... what do i do and what will happen to me? will i goto jail? will i be audited? what does audited mean? can i do a payment plan? can they take some money off if i claim someone as a dependant?

Answer 1

Girl, you're a mess...

Everyone pays taxes, so yes you'll have to pay at the end of the year.

If your boyfriend doesn't work, I'm sure his parents already claim him.

And I can't believe you could be pregnant which is NOT tax deductable. The baby has to be born to claim it.

Like I said you're a mess. Get your taxes straight, make your boyfriend get a job so he can support you and the baby if there is one on the way and if not, buy some birth control. You're not ready...

Answer 2

Kind of a mess.  First off, your relationship with the spa might or might not pass as an independent relationship.  It sounds to me like the employer is trying to evade payroll taxes and should have withheld your share and their share from your wages.  Secondly, your taxes are your responsibility; the fact that nothing was taken out is meaningless, that gave you more money with which to pay your liability.  The IRS loves to set up payment plans.  The problem is that you will have to pay off the old taxes along with the current ones, but at least that's an alternative.  Having a dependent can help a lot and you might get an earned income credit that will offset the taxes you owe.  Also, start saving your sheckels between now and the end of the year, fill out a 1040ES and send them a check, it will save some penalties later.

An audit is merely an act by the IRS of defining what your income and or expenses actually are.  People fear audits usually because they have something to hide.

Answer 3

As for the boyfriend and baby.

Read IRS publication 501.  Under very strict circumstances you may be able to claim your boyfriend as a "qualifying relative."

Answer 4

Start saving NOW.  You should be making quarterly tax payments and you will owe a bundle at the end of the year.  You need a tax accountant.

Answer 5

Don't panic - you aren't going to jail.  But start saving, NOW.

If you don't have enough at the end of the year to pay your taxes, you can set up a payment plan, but it will cost you a fee to set it up, and or course interest while you are paying it off.

Audited means they question some part of your tax return and ask for additional information.  In this case it probably won't be an audit, they'll just send you a bill.  You'll be way ahead to file your return properly and report the income, even if you can't pay what you owe.  It can take quite awhile for them to notify you if you don't, and by that time interest and penalties really add up!

Your income tax will be less if you have a dependent than if you don't.  Do you have a dependent?  But your self employment tax, for social security and medicare, will be a lot of what you owe, and that's the same whether you have dependents or not.

If you post again with how much you will make for the year, and who if anyone you can claim as a dependent, somebody can give you a better idea of what you'll owe.

Answer 6

first off if you won't go to jail ( only if your really stupid about your money). Ask your family to chip in a little, or get a part time job, or use some saving from bank acount, etc. Always be smart with money. But first you need to calm down and breathe. Im trusting your smart and you will make the right decision. P.S. if your religious you should pray...hard.

Answer 7

If your bf lived with you all year, you supported him, and he had less than $3,500 of income subject to tax, you can claim him.  I will assume you can claim him.

With one dependent, and filing single (your only choice at this point), your tax (income plus self-employment) is about $2,000.  This assumes you are not able to deduct any expenses from your work.  

Now before you panic, the filing deadline for 2008 is 8 months away.  You need to save $250 a month in order to be able to pay your taxes.  You will also pay a small penalty for not paying in advance through estimated taxes, but it's too late to worry about that.  

If you have a child before the end of the year, your taxes will be eliminated.  But given this is about September, you'd know by now if that is going to happen.  So, start saving now, get the bf to earn some money to help out, and you will be OK.