I am a contract employee for a local business and paid an hourly wage for the hours I submit. No taxes are taken out. How much should I be putting aside/adding to my quarterly payments, so I am not given a big tax bill at the end of the year?
Thank you
Beth
You'll need to sign in or create an account to connect with an expert.
Hi Candiecook,
That is a great question! It pays to be prepared.
As an independent contractor you are responsible for what is referred to as the Self employment tax of 15.3%. As an employee, you share that cost with your employer, as each of you pay a share of the FICA tax (Social Security tax and Medicare). Your share is automatically taken out of your paycheck so it doesn't typically show up on your tax return. When you're self-employed, though, you're stuck with the full amount yourself.
Additionally, your self employment income will be subject to income tax, which will depend on your income bracket.
Both links below have a lot of details regarding self employment tax and how to be prepared.
A guide to self employment tax
Hopefully that helps and good luck with your adventure.
Thank you for your well explained answer
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
MsMoe
Returning Member
bfinlayson01
New Member
celtic_fire12
New Member
Chipster
New Member
Mprice25
Level 1
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.