Hi! I recently started a new job and my boss pays me by using a business check. No taxes are taken out, I’m paid exactly how many hours i worked at my hourly wage. How does this work for filling

[Critter]

You use the terms "new job", "my boss" and "hourly wage"  so you think you are an employee but they are treating you as a sub contractor who is responsible for their own taxes.  Are you an employee ?   Or are you self employed ? 

See what the IRS says ... and get on the same page as this "employer/client" now before you go too far ...

https://www.irs.gov/taxtopics/tc762

[Hal_Al]

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%.

[Anonymous]

Being misclassified as an independent contractor instead of an employee for legal and tax purposes can be very costly. Among other things, it means that you'll:

have to pay all your Social Security and Medicare taxes out of your own pocket (employers must pay half of these taxes for employees, but not independent contractors
be ineligible for unemployment benefits (and your employer won't have to pay for unemployment insurance for you)
be ineligible for worker's compensation benefits (and your employer won't have to pay for workers’ comp insurance for you)
have none of the workplace rights that employees usually have, such as a right to a minimum wage, overtime pay, sick pay, and rest breaks
be ineligible for healthcare coverage as an employee under Obamacare starting in 2014.

what to do if you believe after reviewing the tax topic, you should be classified as an employee

First, you can try to talk to your employer to see if it will review your classification and reclassify you as an employee. Explain that you think you've been wrongly classified as an independent contractor. At the very least, you should get an explanation as to why they think you are a contractor, instead of an employee.

as a last step

Get the IRS Involved. If trying to talk to your employer doesn't work, you can contact the IRS. Workers who believe they have been misclassified as independent contractors may request that the IRS determine their employment status for federal tax purposes by filing form IRS Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding. There is no fee for filing.

You answer a series of questions on this form about the nature of your work and how your employer treats you on the job. After the IRS receives the form, it will contact your employer to get their version of the facts. It will then determine what your status should be for purposes of federal employment taxes and income tax withholding. The decision made by the IRS will be binding on the IRS. It is not binding on your employer, but any employer who ignores the IRS's determination will be in for trouble.

One  thing to keep in mind is that the IRS may disclose your identity to your employer, which might not make the employer too pleased with you. ie you may be fired and the employer might delay any payment due you.