I am a nanny and find it difficult to find an employer who understands how to do withholdings. It would be easier to pay the taxes myself, do I need to form a business or can I file as self employed.
how can I pay taxes on income if self employed and employer does not take out withholding?
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3 Responses to how can I pay taxes on income if self employed and employer does not take out withholding?
You can just fill out the Schedule C and SE. These are the self-employed forms and it will be a lot easier than trying to set up a business. You can still deduct any work related expenses (such as mileage).
If you start doing this, though, you will probably have to make quarterly tax payments. The IRS wants thier money periodically throughout the year, and you can be fined if you make a certain amount and don’t make payments.
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If you go the self employed route, you will also have to pay your own version of social security taxes. I don’t know the current rate but it is about 12 to 15%.
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To send in Estimated tax payments you will have to use the form 1040-ES. The irs likes you to send in 4 payments thruout there year.
You can find the form here:
http://www.irs.gov/pub/irs-pdf/f1040es_05.pdf
Now if you have a W-2 your employer should be doign the federal withholding for you.
If you get a 1099-misc you will need to fill out form Schedule C. You can fill out this form as a sole proprietor and just use your Social security number as your tax id number. You will also need to fill out Schedule SE to see how much self employment tax you owe.
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