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skylars2-vt-edu
New Member

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

 
7 Replies
xmasbaby0
Level 15

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

Uber will not withhold tax for you.   If you are a rideshare driver you are an independent contractor.  They do not withhold tax, Social Security or Medicare from your earnings.  So you have to pay self-employment tax when you file a tax return, or you can send in quarterly estimated payments to prevent a big tax due amount at tax time.

 

Another approach would be to have more withheld from your W-2 pay if you have another job from which you will receive a W-2.   Increase the amount that employer is withholding from your paychecks by filling out a new W-4 for the employer.

 

https://ttlc.intuit.com/community/tax-topics/help/what-to-know-about-the-new-2020-irs-form-w-4-emplo...

 

https://www.irs.gov/pub/irs-pdf/fw4.pdf

 

 

https://www.irs.gov/individuals/tax-withholding-estimator

 

 

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

 

 

 

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Critter-3
Level 15

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

If you are new to being self employed, are not incorporated or in a partnership  and  are acting as your own bookkeeper and tax preparer you need to get educated ....  

If you have net self employment income of $400 or more you have to file a schedule C in your personal 1040 return for self employment business income. You may get a 1099-NEC  for some of your income but you need to report all your income.  So you need to keep your own good records. Here is some reading material……

IRS information on Self Employment….
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center 

Publication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf 

Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf 

                                         

Publication 463 Travel, Gift, and Car Expenses

Https://www.irs.gov/pub/irs-pdf/p463.pdf  

 

Home Office Expenses … Business Use of the Home

https://www.irs.gov/businesses/small-businesses-self-employed/home-office-deduction

https://www.irs.gov/pub/irs-pdf/p587.pdf

Publication 946 … Depreciation

https://www.irs.gov/pub/irs-pdf/p946.pdf

                                              

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Self Employed return and will help you keep up in your bookkeeping all year along with calculating the estimated payments needed ....
http://quickbooks.intuit.com/self-employed


Self Employment tax (Scheduled SE) is generated if a person has $400 or more of net profit from self-employment on Schedule C.  You pay 15.3% for 2017 SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.
 


PAYING ESTIMATES
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% for 2017  SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year (or next year) if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits. 
 
- 2. You expect your withholding and credits to be less than the smaller of: 
    90% of the tax to be shown on your current year’s tax return, or 
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

OR Go to….
Federal Taxes or Personal (H&B version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

 

How does my side job affect my taxes?

You’re considered self-employed—even if it’s just something you do on the side, like drive for Uber, babysit, or blog.

Your taxes are handled differently than when you’re an employee of a company.

As a self-employed individual you:

  • will pay self-employment tax (because income tax and Social Security aren’t deducted from your pay)
  • will get a 1099-MISC or 1099-K (unless you only accept cash or personal checks)
  • file a Schedule C, Form 1040 (this is how you report business expense or loss of income)
  • can deduct money you spent on work-related expenses (like mileage, home office expenses, and cell phone use)
  • can estimate the taxes that are due and make quarterly estimated tax payments during the year

Get started by entering your income from self-employment. We’ll handle the rest, from creating the forms you need to reviewing work-related expenses that can help reduce your taxes.

 

Related Information:

 

skylars2-vt-edu
New Member

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

Thank you for the reply, I've been self-employed for several years but I always struggle with Setting aside the right amount. I'd prefer to withhold more than I need. In the past, I've tried automated banking with qaptal but even that was too tempting. I know that I have the option of setting up " Backup tax withholding" (automatically sets aside 24%). I'm just wondering if there are any negatives this other than not receiving interest.

rjs
Level 15
Level 15

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

Backup withholding is for people who have violated tax laws, either by not providing a taxpayer ID number (SSN or EIN) when required, or by not reporting all their income on their tax return. It's something the IRS forces you to do, not something you do by choice. You don't want to go there.

 

skylars2-vt-edu
New Member

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

I realize it's not the intended use case but I still feel to see any disadvantages. To me it seems to function as 24% automatically automatically sent to the IRS.

rjs
Level 15
Level 15

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?


@skylars2-vt-edu wrote:

I still feel to see any disadvantages.


One likely disadvantage of backup withholding is that Uber doesn't like to do it, because it's extra work for them. In fact, they might simply refuse to do it at your request, rather than being forced by the IRS. Another possible disadvantage is that it draws extra IRS attention to your tax returns. And doing it by choice, when it's not required, is basically unheard of, which might lead the IRS (or Uber) to investigate more closely what you're up to.

 

VolvoGirl
Level 15

I'd like to set up some system to withhold taxes from my second job (uber) would they be any disadvantage to set up Backup tax withholding?

You can make tax payments through a free US Treasury service called eftps (Electronic Federal Tax Payment System). You have to establish an account, get a PIN, submit your bank info, etc.  Then from that website, you can log in and make any tax payments, Estimates or your 1040 tax due.  It should let you schedule several payments ahead.  Once you establish your account, you can also make free payments by phone.

 

Start here…https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system

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