tax question (independant contractor) - Mothering Forums

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#1 of 8 Old 07-28-2009, 10:03 AM - Thread Starter
 
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i just started delivering newspapers.
i filled out a W-9 form.
i've been informed that taxes will not be withheld from my paycheck.
i've also been told that 30% of all my vehicle expenses are tax deductable.

my questions are:

1) how will i know how much to save back from my checks to pay taxes?
2) when will i need to pay the taxes?


can anyone point me in the right direction here, so i know what i'm doing?

thanks!
Amanda

wife to my awesome DH, homeschooling, unassisted birthing, food growing, life loving mama to 5 crazy monkeys. :
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#2 of 8 Old 07-28-2009, 10:38 AM
 
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1) how will i know how much to save back from my checks to pay taxes?
Save 30% at the very least, if not 35% - I recommend putting it in a savings account and don't touch it, it's not your money in all reality.

2) when will i need to pay the taxes?
When you file your taxes for 2009 in 2010. Any tax you owe will need to be paid before April 15th 2010 or pentalties/ interest will start to be added to that total.

I was an IC for years and years, been there done that many many times.
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#3 of 8 Old 07-28-2009, 10:51 AM
 
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My parents are real estate agents, which are essentially independent contractors, they don't have any taxes taken out either. They have to pay estimated taxes quarterly or they incur penalties, they cannot wait until tax time to pay. I would assume it would be similar for you - definitely look into it and be sure.

If I recall correctly, if you owe more than a certain percentage of your taxes at tax-filing time, you will incur a penalty, taxes are supposed to be paid during the year, not at the end in a lump sum.

Mightymoo - Mom to DD (6) and DS (4)
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#4 of 8 Old 07-28-2009, 10:49 PM
 
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I'm an independent contractor in Texas (no state income tax). I pay 15.3% of my income to US taxes - these MUST be paid by January 15th or there is a penalty for underpayment.
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#5 of 8 Old 07-28-2009, 11:23 PM
 
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The above responses are correct, however, I wouldn't worry too much about penalties if a) your income from delivering papers is modest, especially considering your possible deductions, and b) you generally get a refund. I did a projection for our taxes (using turbo tax) on a potential contract job that would have paid me $30K this year and I would have owed $5-6K federal taxes and the penalty was about $180. So that gives you a sense of the scope of the penalty.

Katherine mother to DS 8/03 and DD1 9/06 and DD2 6/10
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#6 of 8 Old 07-28-2009, 11:24 PM
 
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The penalty I referred to above was assuming I didn't pay a dime until 4/15.

Katherine mother to DS 8/03 and DD1 9/06 and DD2 6/10
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#7 of 8 Old 07-29-2009, 02:12 PM
 
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I'm confused by some of the responses... we always had to pay during the year or there would be penalties and interest. Also, it was more than 15% just for social security... then there are federal and state income taxes on top of that... so about 40% went to taxes.
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#8 of 8 Old 07-29-2009, 02:51 PM
 
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Quote:
Originally Posted by Ygle View Post
I'm confused by some of the responses... we always had to pay during the year or there would be penalties and interest. Also, it was more than 15% just for social security... then there are federal and state income taxes on top of that... so about 40% went to taxes.
I'm not sure, I was just going by what I set aside - since my income is supplemental to my husbands (about 1/5 of what he makes) the amt of "Self Employment Tax" from the 1040 Schedule SE is 15.3%.
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