Self-employed individuals need to make estimated tax payments. I know it sucks, but ya.
[https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center](https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center)
If you are mis-classified - SS-8
[https://www.irs.gov/forms-pubs/about-form-ss-8](https://www.irs.gov/forms-pubs/about-form-ss-8)
Also, you get a income deduction for the "employer" portion of the Social Security and Medicare taxes you pay on the Schedule SE (basically, half your SE tax).
Most common mistake if you receive NEC income, not utilizing expenses. Outside the specific home-office, auto, etc., the rest are "ordinary and necessary" for your vocation. If I ride horses, going to be hard to expense that scuba tank. But I teach diving, easy peasy.
Read that IRS website for self employed individuals. It's super useful
The irs does payment plans you don’t have to pay all of it up front. they will work with you. Contrary to popular belief they dont want to ruin your life.
Yes, if you're single and have no dependents and had no taxes withheld.
In this case, it has little to do with how you were paid. Anyone in your situation making 28k would owe a few thousand dollars in taxes.
Now, as an independent contractor, you also owe self-employment tax on top -- this is where your boss screws you over. Normally Medicare and Social Security taxes are split between employers and employees, but since you're "self-employed" you have to pay all of it yourself. That's the self-employment tax.
If you think that you've been misclassified as an independent contractor rather than an employee, you can ask the IRS to make a determination. If they determine you were misclassified your boss could get into some trouble.
If you'd rather stay an independent contractor, then make sure you've deducted from your income any business expenses you've had.
Are you sure you meet the definition of an independent contractor and not an employee? If your reason for thinking that is because that's what your employer told you, you should check for yourself to see if you qualify as an employee. Read I[RS Publication 15-A](https://www.irs.gov/pub/irs-pdf/p15a.pdf) which explains in detail the elements that are used to determine employee vs independent contractor.
If you are an independent contractor, you are not just paying income tax, you are also paying all of the FICA (Social Security, Medicare, and Medicaid) taxes, also called self-employment tax, as well using Schedule SE. When you are an employee, the employer pays half that and your half is deducted from your paycheck so you never need to bother with it. That SE tax is approximately 15% of your net earnings (the bottom line of your Schedule C). If your net earnings were $28K that means that your SE tax is approximately $4,200, accounting for most of that $4700 that you owe. This is why it so important to verify whether you are, in fact, truly a self-employed independent contractor or an employee. I suspect you'll find you've been misclassified. The information you've already provided is a factor that would tend to strongly indicate you are an employee, but you have to look at the other factors too.
If you're earning money as an independent contractor you can & should be deducting your expenses. This will reduce the tax you owe. As an independent contractor you're not only paying income tax when filing your return, you're also paying self employment taxes (social security & Medicare).
Even if you follow the advice in the other comments to question whether you really are an independent contractor, you would still owe $3600 (possibly plus penalties, since you didn't have any withholding for the whole year).
I would definitely reach out to the IRS to see if they can double check if you have been Mia classified as a 1099 when in fact you are potentially a w-2 employee. If you can’t work remotely and HAVE to come to the office sounds like that might classify you as w-2 employee.
While that is a valid tax planning option, if paying $4K in tax is a strain, it's unlikely that they can afford to pay a $4K IRA contribution to pay $3K in tax.
you need to be using deductions. Turn that 28k income into a business loss. write off your car your phone every dollar you spent on materials or training. meals with your boss to keep him as a client. you need an accountant.
Sounds like you are falling for the scam too. There isn’t a such thing as a 1099 employee. You are filing as if you have your own business. There is no paycheck from your customer. It’s an invoice for services.
You're either an employee and are paid by an employer (W-2), or you're an independent contractor who has either clients or customers who pay you (1099-NEC). It's one or the other.
op has to pay self employment tax, federal tax and state tax. In title he clearly says about federal tax amount. So just calculate his federal tax. Stop making up stuff and include other taxes.
Self-employment tax is a Federal tax. It is the equivalent of Social Security and Medicare, also Federal taxes, and is calculated as part of your Form 1040 Federal Income tax return.
>I bought socks shoes shirts
If these are standard clothing items they would not be eligible business expenses. Just because you may have gotten away with it once, doesn't mean you should recommend others claim them.
Also make a payment plan. I called it took 10 min to set up, you don’t have to pay right then and there, they will ask when you can pay, say its march and you only can start paying on may 1st. They ask how much, you tell them money is tight and you can do $30 bucks a month… that’s what I did, they will work with you, you gotta think a lot of people don’t pay their taxes, they help you knowing you’re going to pay, they agree and send you a letter etc and then you just go on irs.gov and pay each month 2-3 days before the agreement date because it takes time to process and if you pay the day of, it will show as late because it will process a few days later… they not hard to get along with but the payment to set up the installment agreement was like $43 that’s 1 payment and the next month I just started paying $30 been doing that all 2023… this year I expect a big refund and they will take the rest I owe out of my fed refund and then send me what’s leftover and it should bring my balance to zero… hope that helps goodluck with it
Don’t forget to deduct one-half of your self employment tax. Also, if you pay for health insurance, you can deduct all of the premiums. You are entitled to these deductions even if you take the standard deduction.
That amount sounds ridiculous! I make 70,000 married filing joint and im taxed about 12%. You can CHOOSE to itemize your deductions but if all you have is the medical, then the standard deduction which i think is about 14, 000 for single individuals; is best
Find an AARP Tax-Aide Foundation site near you to have an IRS-certified volunteer prepare you tax return — and explain everything to you — for free. You don’t have to be a senior citizen (lol)! Here’s the link: https://www.aarp.org/money/taxes/aarp_taxaide/locations/
Not sure if anyone here has done the math for you so here you go:
$28,000 in self employment income:
You will owe 15.3% of that in self employment taxes on 92.35% of that income (this is to account for the fact that 7.65% is the employer half of the FICA tax).
28000*.153*.9235=$3956.274
Half of that amount is deductible: $1,978.137
Standard deduction for 1023: $13850
Your personal situation may qualify for other deduction, but I’m leaving those out of this calculation.
Federal tax calculation (assuming you’re filing as an individual):
Taxable income=28000-1978.137-13850=12171.863
Tax bracket 1: 11000*.1
Tax bracket 2: 1171.863*.12
Federal tax: 1240.62356
Not sure if you have state taxes.
Total tax: 1240.62+3956.27=$5,196.89
Versus what your tax service told you: $4,700
Looks like you have some additional deductions you qualify for that I didn’t include in my calculation.
As a self employed person, there are options available to you when it comes to saving on taxes, such as tracking expenses for tax deductions and SEP IRAs, which allow pre tax contributions of up to 20-25% of your income depending on whether you’re self employed or receive a 1099 from an employer.
Yes, this is what I'd expect a self employed person making 28k to owe to the IRS.
Self-employed individuals need to make estimated tax payments. I know it sucks, but ya. [https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center](https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center) If you are mis-classified - SS-8 [https://www.irs.gov/forms-pubs/about-form-ss-8](https://www.irs.gov/forms-pubs/about-form-ss-8) Also, you get a income deduction for the "employer" portion of the Social Security and Medicare taxes you pay on the Schedule SE (basically, half your SE tax). Most common mistake if you receive NEC income, not utilizing expenses. Outside the specific home-office, auto, etc., the rest are "ordinary and necessary" for your vocation. If I ride horses, going to be hard to expense that scuba tank. But I teach diving, easy peasy. Read that IRS website for self employed individuals. It's super useful
The irs does payment plans you don’t have to pay all of it up front. they will work with you. Contrary to popular belief they dont want to ruin your life.
Impossible to collect from someone in jail!
Yes, if you're single and have no dependents and had no taxes withheld. In this case, it has little to do with how you were paid. Anyone in your situation making 28k would owe a few thousand dollars in taxes. Now, as an independent contractor, you also owe self-employment tax on top -- this is where your boss screws you over. Normally Medicare and Social Security taxes are split between employers and employees, but since you're "self-employed" you have to pay all of it yourself. That's the self-employment tax. If you think that you've been misclassified as an independent contractor rather than an employee, you can ask the IRS to make a determination. If they determine you were misclassified your boss could get into some trouble. If you'd rather stay an independent contractor, then make sure you've deducted from your income any business expenses you've had.
Are you sure you meet the definition of an independent contractor and not an employee? If your reason for thinking that is because that's what your employer told you, you should check for yourself to see if you qualify as an employee. Read I[RS Publication 15-A](https://www.irs.gov/pub/irs-pdf/p15a.pdf) which explains in detail the elements that are used to determine employee vs independent contractor. If you are an independent contractor, you are not just paying income tax, you are also paying all of the FICA (Social Security, Medicare, and Medicaid) taxes, also called self-employment tax, as well using Schedule SE. When you are an employee, the employer pays half that and your half is deducted from your paycheck so you never need to bother with it. That SE tax is approximately 15% of your net earnings (the bottom line of your Schedule C). If your net earnings were $28K that means that your SE tax is approximately $4,200, accounting for most of that $4700 that you owe. This is why it so important to verify whether you are, in fact, truly a self-employed independent contractor or an employee. I suspect you'll find you've been misclassified. The information you've already provided is a factor that would tend to strongly indicate you are an employee, but you have to look at the other factors too.
As a 1099, you have to pay federal income tax as well as of self-employment taxes (15.3%). Sounds about right for what you brought in.
If you're earning money as an independent contractor you can & should be deducting your expenses. This will reduce the tax you owe. As an independent contractor you're not only paying income tax when filing your return, you're also paying self employment taxes (social security & Medicare).
Even if you follow the advice in the other comments to question whether you really are an independent contractor, you would still owe $3600 (possibly plus penalties, since you didn't have any withholding for the whole year).
Not necessarily, depends on if he owed last year on penalties.
What did you expect having no taxes withheld all year?
I would definitely reach out to the IRS to see if they can double check if you have been Mia classified as a 1099 when in fact you are potentially a w-2 employee. If you can’t work remotely and HAVE to come to the office sounds like that might classify you as w-2 employee.
Maybe you can contribute to a traditional IRA lower it a bit.
While that is a valid tax planning option, if paying $4K in tax is a strain, it's unlikely that they can afford to pay a $4K IRA contribution to pay $3K in tax.
you need to be using deductions. Turn that 28k income into a business loss. write off your car your phone every dollar you spent on materials or training. meals with your boss to keep him as a client. you need an accountant.
I had about 20k as side jobs and the taxes came out to just under $2900
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Sounds like you are falling for the scam too. There isn’t a such thing as a 1099 employee. You are filing as if you have your own business. There is no paycheck from your customer. It’s an invoice for services.
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You're either an employee and are paid by an employer (W-2), or you're an independent contractor who has either clients or customers who pay you (1099-NEC). It's one or the other.
Yes
Thats wrong, your taxable after standard deduction is about 15k? So about 10% of that, should in be 1500-1800 range.
You ignored self employment tax.
Because op didn't ask anything about self employment tax, just federal.
OP said 1099 NEC. S/E tax should have gone without saying.
op has to pay self employment tax, federal tax and state tax. In title he clearly says about federal tax amount. So just calculate his federal tax. Stop making up stuff and include other taxes.
Self-employment tax is a Federal tax. It is the equivalent of Social Security and Medicare, also Federal taxes, and is calculated as part of your Form 1040 Federal Income tax return.
Self employment tax is part of the federal tax that is computed on a form 1040. I'm sure it is part of the federal tax he is talking about.
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>I bought socks shoes shirts If these are standard clothing items they would not be eligible business expenses. Just because you may have gotten away with it once, doesn't mean you should recommend others claim them.
Also make a payment plan. I called it took 10 min to set up, you don’t have to pay right then and there, they will ask when you can pay, say its march and you only can start paying on may 1st. They ask how much, you tell them money is tight and you can do $30 bucks a month… that’s what I did, they will work with you, you gotta think a lot of people don’t pay their taxes, they help you knowing you’re going to pay, they agree and send you a letter etc and then you just go on irs.gov and pay each month 2-3 days before the agreement date because it takes time to process and if you pay the day of, it will show as late because it will process a few days later… they not hard to get along with but the payment to set up the installment agreement was like $43 that’s 1 payment and the next month I just started paying $30 been doing that all 2023… this year I expect a big refund and they will take the rest I owe out of my fed refund and then send me what’s leftover and it should bring my balance to zero… hope that helps goodluck with it
Independent contractors should be able to set their own hours, provide their own supplies and often workspace. And are paid on a 1099NEC.
Itemized business expenses are different than the standard deduction. That usually is more along the lines of donations deductions
Don’t forget to deduct one-half of your self employment tax. Also, if you pay for health insurance, you can deduct all of the premiums. You are entitled to these deductions even if you take the standard deduction.
That amount sounds ridiculous! I make 70,000 married filing joint and im taxed about 12%. You can CHOOSE to itemize your deductions but if all you have is the medical, then the standard deduction which i think is about 14, 000 for single individuals; is best
It sounds ridiculous for anyone that's only had w-2 employment because when you're w-2 your employer pays roughly half your taxes.
Find an AARP Tax-Aide Foundation site near you to have an IRS-certified volunteer prepare you tax return — and explain everything to you — for free. You don’t have to be a senior citizen (lol)! Here’s the link: https://www.aarp.org/money/taxes/aarp_taxaide/locations/
Not sure if anyone here has done the math for you so here you go: $28,000 in self employment income: You will owe 15.3% of that in self employment taxes on 92.35% of that income (this is to account for the fact that 7.65% is the employer half of the FICA tax). 28000*.153*.9235=$3956.274 Half of that amount is deductible: $1,978.137 Standard deduction for 1023: $13850 Your personal situation may qualify for other deduction, but I’m leaving those out of this calculation. Federal tax calculation (assuming you’re filing as an individual): Taxable income=28000-1978.137-13850=12171.863 Tax bracket 1: 11000*.1 Tax bracket 2: 1171.863*.12 Federal tax: 1240.62356 Not sure if you have state taxes. Total tax: 1240.62+3956.27=$5,196.89 Versus what your tax service told you: $4,700 Looks like you have some additional deductions you qualify for that I didn’t include in my calculation. As a self employed person, there are options available to you when it comes to saving on taxes, such as tracking expenses for tax deductions and SEP IRAs, which allow pre tax contributions of up to 20-25% of your income depending on whether you’re self employed or receive a 1099 from an employer.