How do I know what to file on my taxes?
I am a single female, no children, who lives and works in New York City. My boss writes me a check for $1000 biweekly, so I assume he is paying me as an Independent Contractor. Should I be setting aside a certain percentage of that money each month to cover taxes when I file in April? I do not want to come up short, but I am barely covering my expenses now. Would I even owe taxes because my income is so low?
How do I know what to file as? In the past, I was a student and always filed exempt. Would I file as Single with 2 exemptions (1--because no one else can claim me; 1--because I am single with one job)? I cover all my own expenses including rent; should I also file as Head of Household?
What about if I get a second part time job in the future that pays $300 a week? How do I report this? Do I need to report this? I heard that if you make under $600 total at any job, you are not required to claim it.
I know there are a lot of questions here but I must take charge of where my money goes. Any help will be much appreciated.
Mars
Mars - If you refer to someone as "boss," you are probably not an independent contractor. Many people try to get away with paying workers as independent contractors so they don't have to file payroll forms and pay FICA taxes, but that doesn't make it right. Your "boss" should be paying you as an employee and paying payroll taxes on your behalf.
You probably do not owe income taxes, but self-employment taxes can cause you some grief. As an employee, you wouldn't have to worry about having the right amount of Social Security and Medicare tax withheld. And if you ever lose your job, you'll get unemployment benefits. If you get hurt on the job, you are insured. Right now, you are unprotected.
When you file your return, file as Single. You must have a dependent to file as Head of Household.
You always have to claim income. If you make less than $600 per year from one place as an independent contractor, they don't have to send you a 1099 form, but you still have to claim the income.
Hope this helps,
Sally