Help on being self-employed/1099? I don't understand.?
Hi. I am a 20 year old full time college student still living at home. I recently got hired as a web designer in the beginning of August for a car stereo company. The store manager told me that I will be a self-employed employee, and told me to make sure I take money out of my paychecks. I make around $200 a week ($10 per hour), sometimes the hours vary slightly, and I get paid in cash. When I got hired, I never filled out paper work, I just entered my social security #, name, and address into the computer. When they pay me, I do not receive anything that shows/verifies my hours. I am just really confused. None of this got explained to me really. How much should I put away each week? And should I ask for monthly verification of my hours so when I get my 1099 I will know they didn't mess up/screw me? What does the quarterly thing mean? Will they send me the paperwork or do I have to send something in to the IRS? Does this all sound sketchy?
Thanks for anyone's help.
I am not sure if I can ask for checks. The one time I did get a check it bounced! So freaking weird. He caught it early and paid me in cash/& the late fee though. Which if this happens again, I am quitting.
- Anonymous9 years agoFavorite Answer
In your case, you appear to be correctly classified as a contractor, but it's odd that you are billing by the hour and putting in quite a few hours.
You need to track all the money you get--ask for checks not cash and then photocopy them before you cash them. Think about it, you don't want to think you made $2000 and have them give you a 1099-Misc for $3000. (Even if you don't get the 1099-Misc, you have to report the income.) If you don't get reimbursed for expenses, their total and yours should match.
At any rate, as far as putting money aside, you definitely owe SE tax and that's 13.3% of the total. If your income for the year is more than $5800, you will also owe income tax. It doesn't look like you will hit that number.
As for quarterly payments, if you owe more than $1000 (unlikely for this year), then you are supposed to send money in quarterly. See form 1040-ES.
Edit: Then get a receipt book (or create your own) and whenever he pays you, make a point of filling it out and giving him a copy for his records. You should give him a summary of what he's paid you.