A community of 30,000 US Transcriptionist serving Medical Transcription Industry
IC vs. statuatory..I feel hornswaggled - sunshine
Posted: Feb 11, 2012
I was doing my taxes yesterday and realized my new employer sent me an 1099 instead of a W2. When I looked at it, there was no Social Security or Medicare taxes taken out. I know when I was hired I was told I would be considered an IC. At my last job, I was an IC, but had those taxes taken out, so I assumed this would be the case again. I was atonished to find out my federal tax return went from me owing last year $178 to owing over $1000 this year because of it.
Shame on me for not paying closer attention. Do any of you get a 1099 and how do handle or save back for such a big expense come tax time? I believe I'm going to have to quit this job, as the tax burden is way too much for me to handle.
You put away 25% to 30% per paycheck - and pay quarterly taxes
[ In Reply To ..]That is normal practice. I was an IC for years and if you are able to put 25%-30% away in a separate savings account, and then quarterly you pay that amount to the IRS and State, you will still get a refund.
I don't ever pay quarterly taxes nor do I put any money away - - sm
[ In Reply To ..]Never in the 23 years I've been an IC with my own accounts. And I don't use a tax person - file all my own long-form taxes. The name of the game is being verrrrrry creative with your write-offs. You'd be surprised at what you can write off. And yes, I've been audited and passed. It's your money, use the Tax Code to your benefit to keep what you earn.
And to those who are ICs and get refunds: The IRS Tax Code states that if you get a refund, you DO NOT have to pay quarterly taxes.
Works for you - sm
[ In Reply To ..]If you are successful with your method, that is fine, but not everyone as your ability to handle the complexities of the tax code. That kind of "creativity" might not be something they excel at.
You are correct that you do not have to send in payments quarterly if you get a refund., but we were talking about someone who had to pay more on top of what had been withheld. It was someone who had NO WITHOLDING.
If the employer does not withhold, nothing gets paid during the yer. You cannot get a refund if nothing was paid in the first place.
The tax code provides penalties for failure to pay enough on a quarterly basis, too.
Seeing the situation accurately - sm
[ In Reply To ..]You are missing something here. The fact that your previous employer withheld your taxes does not mean he used HIS money to pay them. He withheld YOUR money to pay them.
Last year, your employer paid your taxes for you using your money, on a quarterly basis, so that at the end of the year you only had to pay a small amount that had not been withheld.
This year, you are having to pay the entire amount at the end of the year because, essentially, you failed to pay them when you were supposed to each quarter.
This is not the fault of the job. Quitting this job is not goin to help any. You are still paying the same taxes.
The fact that you did not know this tells me that you are doing your taxes yourself instead of using an accountant. You are probably making errors or missing other things that could benefit you, like business use of the home. I was shocked by how much my accountant saved. I even got adjustments on prior years after she redid them.
You need to find an accountant who understands ICs and statutory employees, if that is what you are. I don't mean HR Block or some other seasonal tax preparer, either. I mean an accountant. As part of their service, they will set up your quarterly payments, estimating what you will need to pay, and telling you how to do it. They will also asvis on records you need to keep and will stand by you in the event of an audit. The cost is not that much. I pay about 200 a year and it is well worth it.
seeing the situation accurately - jan2
[ In Reply To ..]H&R Block took care of my taxes during those years that I was an IC and understood completely what IC-ing was all about, explained all the deductions, e.g. portion of the home for office, etc., and the rules on paying your taxes.
H&R Block here refused to do IC or statutory employee - nm
[ In Reply To ..]nm
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