i was working for a dentist starting back in november of 06. i didn't like it, and left on good terms after 6 months. i'm now emplayed my a different dentist, but the last couple of weekends, my PREVIOUS employer has been asking me to work for him. i picked up my first paycheck for working weekends, and my check didn't have a stub. when i asked for one. he told me that i was no longer on the payroll and that he didn't deduct taxes. he said it's "contract work", so, it's my responsibility to claim what i make and what not on my own. i never signed a contract. and i want to paid with my taxes taken out as reference. it helps to get apartments and i'm trying to get a car, so i need it. i'm only 18, and i think he's trying to take advantage that i'm not educated in such matters. i never signed a contract, and he's not giving me what i want. what do it do?
Answers:
He is paying you as a sub-contractor. THat's why he is not deducting taxes. This is a way for him to save money. He doesn't have to match Social Security deductions, pay taxes.
It is quite legal but only if YOU agree to it. He will report what he pays you and the IRS will expect you to pony up the taxes at the end of the year.
Many employers try this.but it won't hold up with the tax man if there isn't some sort of contract.
Yes, he is trying to use you as a subcontractor. You have two options:
1. ask him for a contract in writing. This contract should say that if the IRS determines your relationship to be employer-employee rather than contractor-contractee, the boss will be responsible for financial consequences (otherwise, if the IRS says you are an employee, you will have to pay all the payroll taxes). Have a lawyer read it over before signing.
2. insist on being hired as an employee.
If you need the stubs for verification of income, just
keep photocopies. At the end of the year you should
receive a form 1099 for wages that he paid you, compare
the amount on the 1099 form to the amounts from your
photocopies, for your own good deduct 15.9% from each
check for Social Security taxes and another 10% for
federal taxes, put this amount of money into a savings
account after you get paid, you will need them to file
your income taxes at the end of the year.
You don't necessarily have to sign a contract to be paid
as a contract employee, this part time job keeps the
dentist from having to pay 50% of your Social Security and
State disability, if you get injured on the job you are on
your own (ie no disability) If you are not comfortable with
working in this manner tell the dentist that you can not
work this way.
As a contractor you can deduct the mileage you put on
your car to travel to and from work, plus other costs
make sure you keep good records.
Ask yourself two things.
1) After you deduct the taxes out of what he is paying you, is he paying you enough to make it worth putting in the time.
2) How important, really, is it to be able to prove this little bit of additional income when you apply for apartments, etc?
If you aren't getting enough to offset the taxes that you are going to have to pay out of your own pocket at the end of the year, or if the additional 'proveable' income is that important, you'll have to find another side job instead.
Otherwise, enjoy your side job, while saving 20% of your weekend earnings to be able to pay the piper next April 15th.
One more note, don't let yourself end up owing the government, especially the IRS more than $1000 per quarter, or you will get fined.
If you keep the side job, you might want to increase your taxation rate at your regular job to avoid owing more than $1000 to the federal government at the end of the year.
Nothing wrong with that, I've been working on contract for years. Actually, it entitles you to more tax deductions.
As long as you claim it on your taxes, you can prove your income based on your return.
He could be doing you a favor.
Revenge is always a good alternative.
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