Need help figuring how much to put aside...
November 23, 2009 8:57 PM   Subscribe

I need to know a rough estimate of how much I should take out in taxes. Theres no withholding with my checks because the temp agency is whack like that. But I need to know how much to take out for tax season? I live in NY, but don't live in the city. So far I earned with this agency... 7466.55. The end of the year it will be $9000 earned. Can anyone help?
posted by InterestedInKnowing to Work & Money (12 answers total) 1 user marked this as a favorite
Are you asking about federal, state, or local taxes? Or some combination?
posted by jedicus at 8:59 PM on November 23, 2009

And is the $9000 your only income or do you have other sources? Was any tax withheld for those other sources, if any?
posted by jedicus at 9:00 PM on November 23, 2009

Both federal and state for this particular agency. I do have other sources of income where the taxes are taken out.
posted by InterestedInKnowing at 9:04 PM on November 23, 2009

There are a lot of variables, but the important one is whether they are taking out FICA. If not, you're going to have to pay, I believe 15.3% if my memory is correct, which comes to about 1,400.

The Fed, State, and local will be minimal because of your standard deduction, this will change if someone declares you as a dependent.
posted by rakish_yet_centered at 9:13 PM on November 23, 2009

Well, for a rough estimate, you could try one of the calculators at paycheck city. I would think in your case that you would have to enter your gross salary from all of your jobs and then check your other stubs to see the difference. So if your total yearly gross is $30k (including that $9k), you should take home around $23,231 (if you're single with no allowances). If you've taken home $25k, then you would owe roughly $2k. Obviously, this would be an estimate, but it's a quick & dirty way of planning for April 15.

Or you could call the IRS and ask them for help.
posted by dogmom at 9:21 PM on November 23, 2009

Alright, well this is probably the best federal tax estimator.

Someone else can chime in about New York state. This page will take you to the right tax table, if you know what kind of return you're filing and your New York state adjusted gross income and taxable income.

Was FICA (Social Security and Medicare) also not withheld? You'll definitely have to pay that, even if you owe no federal tax or get a refund. You'll need to find out if they withheld the whole FICA package, just the employer share, or nothing.

Are you married? Do you have children? Will someone else claim you as a dependent? Did you make student loan repayments? These can all have a significant impact.

Are you considered an employee or an independent contractor? That will change a lot of things. In particular, if you're an independent contractor you may have been expected to make quarterly estimated payments. If you owed no federal tax last year, you might not have had to make estimated payments this year, but you'll have to file for a waiver or else you'll be penalized for not making quarterly payments. Depending on how NY state works, they may have been expecting quarterly payments too.

You might consider hiring an income tax preparer. If you have a pretty complicated return it will run about $300.

The Fed, State, and local will be minimal because of your standard deduction, this will change if someone declares you as a dependent.

This all depends on your other income. To make an exaggerated example, if you had $1 million in income from other sources, the marginal rate on the $9000 would be substantial.
posted by jedicus at 9:29 PM on November 23, 2009

You need to call the IRS and set something up if you're going to work like that. I got a pretty sizable penalty one time for grossly under-withholding tax (in addition to the tax I owed). [It turned out that I got a big disability back-pay check during the year, untaxed, so that was why. They cancelled the penalty because I couldn't have known about that ahead of time]

They have calculators for how much you should set aside, and they like you to make payments on a schedule (quarterly, I think?) Definitely call the IRS to avoid penalties.
posted by ctmf at 9:31 PM on November 23, 2009

.... or if you made 1 million dollars from other sources
posted by rakish_yet_centered at 9:34 PM on November 23, 2009

As someone who's often as not been an independent contractor, I've always gone with the 25% rule. Take 1/4 of every paycheck and stash it somewhere, not to be touched. At year's end, you'll have either:

A. a bonus
C. no worries
C. a workable deficit

By the way, the 25% figure is relevant to a more or less communist nation. You'll likely find a different figure us more relevant for the Untied States Anarchy.
posted by philip-random at 10:25 PM on November 23, 2009

As an independent contractor in the US I usually set aside about a third, which worked out pretty well.
posted by fshgrl at 11:25 PM on November 23, 2009

The first thing to find out is whether your employer is treating you as a contractor or not. The easiest way to find out is to look at what tax form they give you at the end of the year: employees get W-2s, contractors get 1099s.

If they're treating you as an employee, and just not withholding any taxes, that's weird but it's not harming you any. Sock away some money out of each paycheck and you'll be fine.

If they're treating you as a contractor, THEY ARE SCREWING YOU AND WHAT THEY ARE DOING IS PROBABLY ILLEGAL.* Call the IRS and report the fuckers.

The general IRS phone number is 1-800-829-1040. Call them, tell them you've been misclassified as self-employed, and they can explain what to do next. You should get the details from an expert but as I understand it the gist of it is, you won't get in trouble with the IRS, you won't have to quit your job, and the temp agency won't even know it was you who complained.

*The difference has to do with the FICA tax others are talking about upthread. Employees are only responsible for half the FICA tax on their wages. The other half comes out of the employer's pocket. Contractors, on the other hand, have to pay the whole shebang themselves. Which means that by treating you as a contractor, the temp agency can squirm out of paying their half of the FICA tax, and shift the burden onto you. We're talking a significant amount of money here, hundreds of dollars out of your $9,000 income for the year, that your bosses have essentially stolen from you.

Here are the criteria for determining if you're an employer or a contractor. The rules that are most relevant to you are here. Some crucial tidbits:
  1. If your boss can tell you to show up at the office instead of working from home, you're probably not a contractor.
  2. If they can tell you what hours to work, you're probably not a contractor.
  3. If they can tell you what supplies or tools to use, you're probably not a contractor.
  4. If they train you to do the job a particular way, instead of letting you get it done however you feel like getting it done, you're probably not a contractor.
By those criteria alone, unless you work for a very unusual temp agency, you almost certainly aren't a contractor and if they treat you as one by giving you a 1099 or refusing to pay their half of your FICA, THEY ARE SCREWING YOU.

posted by nebulawindphone at 7:15 AM on November 24, 2009 [2 favorites]

You probably are not eligible to be treated as a subcontractor, and if they are treating you as one, you're getting screwed on FICA.

There's a nice savings tax credit that you may be eligible for.
posted by theora55 at 10:21 AM on November 24, 2009

« Older How to prevent alcohol-induced blackouts?   |   My servos are seizing Newer »
This thread is closed to new comments.