It sounds like your boss is treating you as a contract employee ("independent contractor"). You should verify this with him/her. You will file as a self employed sole proprietor, adding Schedule C to your tax return.
When you file, you will not only pay income tax, your will also pay "self employment" tax (SET).
What is self employment tax? It’s how the self employed pay social security tax. An employee pays 6.2% of his wages for social security tax and another 1.45% Medicare tax for a total of 7.65% In addition, his employer pays a matching 7.65%, for a total of 15.3%. A self employed person gets to pay the entire 15.3%** by himself. But, he doesn't have to pay it until April 15 of the following year, as part of his income tax filing.
If you are worried about possibly having an underpayment penalty, when you file, you can make quarterly estimated tax payments thru the year.
You should make estimated tax payments for the current tax 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.)
TurboTax (TT) can prepare the quarterly payment vouchers. In your 2018 software, enter at:
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
On the next screen answer No to the W-4 question
If your goal is just to avoid the underpayment penalty, then paying 100% of the prior year tax liability is the “safe haven”
Or you can obtain blank IRS Form 1040-ES from the IRS. The form and instructions are at this link: https://www.irs.gov/pub/irs-pdf/f1040es.pdf
You can also pay Federal directly here. Be sure to select 1040ES:
https://www.irs.gov/Payments
** Self employment income is reduced by 7.65% (multiplied by 0.9235) before self employment tax is calculated. This, effectively makes the SET rate 14.13%, instead of the stated rate of 15.3%.
