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The Government is Raping my Paycheck. (Payday Taxes)
powerss
Registered User regular
Registered User regular
So, I used to be paid as an independent contractor. I'm 20 years old, live at home with my mother, and go to school as well as work part time at a startup company in silicon valley.
As an independent contractor, I was making $1,600/month with no taxes taken out at time of payment. Through creative work by my family's CPA, I paid a total of $160 worth of taxes last year. Everything I bought however, was related to my work, and I didn't save any money.
ANYWAY.
Now, I'm an official employee. I filled out a W-9, and have two federal and two state dependencies ( I think that's what they're called.)
My boss gave me a 10% raise to cover the taxes, but with my recent paycheck... well, look below:
How the FUCK do I lower these, or get this money back at the end of the year? I'm way below the fucking poverty line and the government is taking my goddamn money?
As an independent contractor, I was making $1,600/month with no taxes taken out at time of payment. Through creative work by my family's CPA, I paid a total of $160 worth of taxes last year. Everything I bought however, was related to my work, and I didn't save any money.
ANYWAY.
Now, I'm an official employee. I filled out a W-9, and have two federal and two state dependencies ( I think that's what they're called.)
My boss gave me a 10% raise to cover the taxes, but with my recent paycheck... well, look below:
How the FUCK do I lower these, or get this money back at the end of the year? I'm way below the fucking poverty line and the government is taking my goddamn money?
powerss on
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I know it sucks but you want to pay your taxes. My dad is in a lot of trouble with Uncle Sam for not paying his taxes. I don't really know him too well but I'm pretty sure he's very close to spending several years in a federal prison. I know for a fact he's been indicted. Anyway pay your taxes.
Edit: at the end of next year when you file your taxes you'll get a refund though, provided you paid more than you were supposed to.
Shogun Streams Vidya
Also, what about medical benefits? Are you getting any now that you are an actual employee? Are you working full time? Benefits are worth a lot; you're young and healthy, so it may not seem it, but the first time you have to see a doctor it will. Also, if you are not working full time, well, yeah, that always puts a huge crimp on the pay check.
How do you stop it? Vote libertarian, heh.
Until then, look at it this way: you're paying for Humvees!
The goverment doesn't care if you're above and below the poverty line (which is a bunch of BS, btw). The only time you don't pay taxes is if you're on welfare or earn less than something like 3,500 in one year.
How do you get them to take out less pay now that you're not your own business? Start your own business.
You should also keep all of the paperwork from when you were an independent contractor. If you try to be creative for too many years in a row, you'll get audited.
The IRS doesn't dick around. If they think you owe them money, they will get it. If you don't pay enough now, when you actually file you'll get slapped will a bill. If you overpay, you'll get a refund. Them's the breaks.
Pick your poison.
we also talk about other random shit and clown upon each other
Also, you can claim exemptions. You get IIRC $141.67 off your taxable gross for each exemption you claim, if you get paid semi-monthly (it is a different amount based on the payroll schedule your employer has set up). However, you are still responsible for whatever income you make, withholding taxes from your payroll check is just a way for you not to have to get hit with a 15% (or whatever percent you fall into depending on your annual gross) of your annual gross all at once come april 15th. This withholding is where your income tax refund comes from. If you claim zero exemptions, and you end up being overwithheld when you file your taxes, the government sends you a check for the difference. If you don't withhold enough, come tax time you owe the difference between what you have withheld year to date and what you actually owe.
Generally, the only things that you are exempt from paying taxes on is whatever health insurance, pension, deferred compensation, and if your employer participates in a pre-tax public transportation program, whatever fees those would be. These are called pre-tax deductions, and they are deducted from your gross before the federal tax withholding is calculated.
Basically, I've claimed two dependencies. If I claim one, will they take out less taxes?
I was an independent contractor as a Web Designer. Don't fucking infer illegality. I saw every piece of tax paperwork sent in under my name and it was legit. I drove over 30,000 miles in one year for my job, and that's where the majority of my deductions came from.
Now wait - can I deduct miles now that I'm driving to work even though I'm a regular employee?
Doc, you are the best member of these boards.
So, wait.. I can take the taxes out myself, dump it into a savings account, make the interest off it, then pay the government without them taking it out every month?
Wow. I want to do this, if I can.
See, I wouldn't be bitching if this was inverse, i.e. I was paying my State the majority of my taxes. The federal government deserves none of my money, IMO.
My state, however... my car's delicate german suspension is getting fucked by California's shitty roads.
Seriously though, you are paying a lot less than most and you'll get most of it back most likely come tax time.
Yes, I'm pretty sure the savings account thing will work. Just take out about the same amount that the government is taking now, and put it all in a savings account, collect interest and then pay whatever your taxes come to in April. I know a few people that do their taxes like this.
As a regular employee, you cannot claim milage from driving back and forth to work every day, unless it is over a certain mileage and you can't get a job or home closer... basically you have to prove extenuating circumstances. If you drive elsewhere on company business and the company does not reimburse you for mileage, gas, and tolls, then you can claim it on yer taxes.
Out of curiosity, how does a television work out as a business expense for a web developer?
I'm pretty sure that the government takes interest into account when they collect your money at the end of the year. Seriously, you pay the same amount of taxes that everyone else does. Don't get so bent out of shape about it.
Just before you go off and do this, there are very specific rules about not having to pay estimated taxes quarterly (which is what you're supposed to do if your taxes aren't withheld from your income)... IANAtaxL, but I believe it was something like "if by the end of the tax year, you haven't paid at least what you paid last year or x% of what you owe, you get hit with gigantic fines".
I'm getting paid on a stipend now and they don't withhold taxes, and paying estimated taxes is a pita... CA's even worse, if you're off by more than like $100 at the end of the year there's very large penalties
Presentation monitor when I visit clients, has a PC (VGA) input that I connect to my laptop to check for color accuracy.
You can tell them not to take out anything, but let's assume for the moment you would pay $2400 in federal taxes that would otherwise be withheld by the end of the year. Now, you take that money, and instead stick it into, say, a Washington Mutual online savings account linked to your free checking account (since that pays the most of any savings account I've seen), netting you 5% interest.
Over the course of a year, this is going to pay you a bit over $60. Now, if you really, truly think you can stop yourself from spending it, and are willing to go through the trouble of writing a check come next tax year instead of receiving one, yeah, go ahead and do it. But if you're the type of person (and most Americans are) who will end up saying "I'll just make up for it next month," and come next April, you've only got $1000 in your savings account to pay off $2500 in taxes, you should really just let them keep the withholding.
Are your parents claiming you as a dependent?
However, if the deductions you took out last year still apply to this year (travel, computer purchases, etc.) you can continue to deduct them. Commute to and from your primary place of work is not deductible, but any additional travel is.
Anyway, the way you change your withholding is through a form called a W-4 which you can get from your employer. The more allowances you claim on your W-4, the less money is withheld. If you want to know what an appropriate number of allowances is, use the IRS withholding calculator. You will need to have an idea of what your income will be for 2007 and how much your deductions will be.
Oh, and by the way... all that equipment you bought for work and deducted? Typically, equipment deducted from your taxes needs to be used 50% or more for your work, and you will need to keep detailed usage logs demonstrating this. And while you are unlikely to be audited for tax year 2006 (they have little reason to audit somebody who made less than $20,000), in the future, if you continue to make heavy miscellaneous deductions for purchased equipment as your earning power increases, you are significantly increasing your likelihood of an audit.
the "no true scotch man" fallacy.
UK though, I'll just sit here confused with your crazy yank law.
Incidentally I work in the field of fraud investigation, over here, if someone claims an expense and there's any personal use then you have to allow for that and enter it on your return.
PSN: SirGrinchX
Oculus Rift: Sir_Grinch
I actually worked at work on Saturday. Also I went out on a date with a real life girl.
Can you like, permanently break the forums?
Welcome to life, it sucks. You're gonna love it.
Thare are only 2 certanties in life: Death and Taxes.
Quit bitching about it. I get 2x as much pulled off of every paycheck.
On a serious note, Welcome to the real world.
For reals. That money has to come from somewhere, and if you're not going to pay for it, then that means we gotta pay for it. And you're already paying more than 3% less than even I am, and that's with the disability thing (I dunno if that's some CA tax or an employer thing).
Welcome to adulthood.
On the other hand, I think I'm also crazy, so take that into account when you decide if that's a good idea.
I am basically in your shoes freelancer > employee, and honestly I can't do the things you asked. And even as freelancer, I still paid more taxes than you did.
Try to create a spreadsheet, documenting all your expenses so when you do your taxes you can verify what you can and not claim with your accountant.
Also be very careful on what you do, everyone doesn't want to pay taxes but its still our duty. If you try to play smart they will catch you. My HS teacher thought he can claim his apartment, he never knew he was being audited for 6 years, where the IRS gave him HIGH income taxes charges. Then they told him to pay a fine.
― Dr. Seuss, Oh, the Places You'll Go!
No, you can't deduct gas an mileage from driving to work as a business expense.
Also, check out how much you're paying in FICA to make sure it's right. It's been a long time since I've had to pay FICA, but it seems odd to me that you should owe as much in FICA as you owe in federal income tax. edit: n/m: The FICA you owe is correct. Sucks.
The thing that should REALLY piss you off is that $109.12 for FICA. That is (at least partly) Social Security which will likely not exist by the time we are old enough to benefit.
Also, before you go adjusting your witholdings you might want to look into whether there are penalties for ending up owing more than X$ at the end of the year rather than having it witheld.
Yep. My job is far, far away. Lots of meetings and errands around the Bay Area, too.
CUZ THERE'S SOMETHING IN THE MIDDLE AND IT'S GIVING ME A RASH
The thing that bugs me is I will pay taxes being an independent contractor... that's ludicrous. Why can't I deduct the same things I have to purchase for my job, even if I'm now an employee?
Or is it the case of "Just can't do it."
i.e., If I bought a new laptop for work... can't deduct it? Car? CDR's? Cellphone?