I startedworkingasContractorInApril I just got paid on Friday but it showed0taxes and I asked myFriendwhy noreductioninintaxes. iprefer paying monthlyinstead pleaseadvise

[chongwj]

i worked as contractor at my friends company this year after losing my w2 job last year

[chongwj]

sorry due to words limitation I have to shrink them without spaces this is for 2021 not 2020

[VolvoGirl]

There was a much bigger box to type the full question with details below.  You seemed to find it for the seond sentence.

You need to send in quarterly Estimated payments to cover any income tax and self employment tax on the income.  I'll post you more info on self emloyment in the next box.

To prepare estimates for next year you need to be in your current return. If you can't get your return open, Try this, you can sign back onto your account, click on Add a State. This should get you back into your return. Be very careful not to change anything in your actual return.

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 (Home&Business version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

Say No to W4. When you get to the W4 and Estimated Taxes section, say you want to adjust your income to go though all the screens.

[xmasbaby0]

You actually had plenty of room to enter all your details if you would have gone down to the box below where you posted the first part of your question.  Sounds like your friend is treating you as an independent contractor instead of as a W-2 employee, which means they are not going to withhold Social Security, Medicare or tax.   When you are self-employed (which is how the IRS will regard you) you have to pay those for yourself.   To avoid a big tax bill at tax time, you might want to pay some estimated taxes during 2021.

Get things clear with the friend you are working with/for and find out if he will be providing you with a 1099NEC at tax time next year.   If you are spending money on tools, supplies, equipment, etc. to use on the job, keep track of your expenses.  Or keep track of any business related mileage  --commuting to and from work does not count.   

Since you are an independent contractor, you will be paying self-employment tax as well as ordinary income tax.

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

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

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

[VolvoGirl]

When are a contractor, you are the owner of your own self employment business. You are in business for yourself. Use your own info. The people or company that pays you is your customer or client. You need to fill out schedule C for self employment business income. You are considered to have your own business for it. YOU are the business. The person or company that pays you is your customer or client.

You may get a 1099NEC at the end of the year if someone pays you $600 or more. But you need to keep your own good records of your income. You should use a program like Quicken or Quickbooks.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can enter Self Employment Income into Online Deluxe or Premier but if
Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% 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. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

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

[chongwj]

Thanks for the response I checked he said I'll be issued 1099-MISC  at year end instead of W2.Is there a way I can request monthly deduction from his end or my end just like I work for w2 work ?

[VolvoGirl · Accepted solution]

No.  You are not an employee.  You are responsible for your own withholding and tax.  You need to send in quarterly estimated payments.  

And actually now he should send you the new 1099NEC form.  They split it off from the 1099Misc.  Make sure he knows that for the end of the year.

[chongwj]

I just looked up irs https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes is that for last year due date ?

[VolvoGirl]

I think so.

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

The 1040ES quarterly estimates are due April 15,  June 15, Sept 15 and Jan 18, 2022.  Your state will also have their own estimate forms.

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2021 Estimate