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Posts Tagged ‘business’

Pay Period Taxes

Question: How do contractors pay their own federal taxes each pay period?

Ugh….this economy. LOL.

Well my husband’s employer stopped paying him as a regular employee in early February and started paying him as a contractor. Then in late March, everyone received paycuts. So now my husband is making $10k less than his normal pay and is still not having taxes deducted from his checks.

How can I make payments towards his federal tax so that it doesnt effect us when we file our Income Taxes next January? We usually received a good refund because we have paid in more than necessary. I am worried that this year we will have a serious underpayment if I can’t start making payments toward it now.

His employer has promised to pay back all the shortages, but I’m not 100% confident that will happen!

Any and all help is greatly appreciated!
Thanks!

He will still be getting a w-2. Problem is the w-2 will show a very small amount of taxes paid in comparison to what he should have paid in.

Answer: File a Form SS-8 with the IRS immediately! Employers cannot just decide to stop withholding taxes from employee wages and decree them to be “independent contractors.” Here’s a link: http://www.irs.gov/pub/irs-pdf/fss8.pdf . They are ILLEGALLY evading paying their payroll taxes and putting the burden on HIM, along with the pay cut!

Do NOT delay in doing this! The longer you wait the more expen$ive it’s going to get. As an IC he’ll be paying 14.1% in self-employment taxes instead of 7.65% in FICA taxes, plus income tax at the regular rates. Additionally he’s not eligible for unemployment insurance if he’s an IC and loses his job.

Tax Lien Investing