I am a college kid in texas and just picked up another job. I already work for the state so all my taxes are good with that but me and 2 of my friends just got a maintenance job on the side to make some extra cash. In an attempt to make things simpler we are just being wrote one check in my name and i am dividing it up between us. They do not take any taxes out and the checks varry though depending on how much we work. We each make 15 dollars an hour. My question is how much should ii be setting aside for taxes at the end of the year or where can i find info on this? or is there a better way to get payed like by getting individual checks?
thank you very much
Sun Jul 11, 2010 12:37 am
coaster Senior Advisor
Cash: $ 1626.30
Joined: 11 Oct 2005
It's much better to get paid individually. Some one who's picky about the rules could make a case for you being a subcontractor and your friends being your employees. Then, you'd technically be liable for paying the employer's portion of their Social Security and Medicare taxes; not to mention other implications like Worker's Comp and so forth.
But.......I know how it goes in construction.
As a rule of thumb, if the part-time work will result in tax obligations of $1000 or more, you'll need to file and pay quarterly estimated tax payments. As far as what that translates to in terms of income that's impossible to say without knowing your other income, but assuming you have enough income to already satisfy your personal exemption and standard deduction, then at the lowest marginal tax rate you'd pick up $1000 extra tax with roughly $6600 extra income.
Go to the IRS website and look for "Publication 505"
Sun Jul 11, 2010 1:36 am
siestakey Contributing Member
Cash: $ 7.00
Joined: 08 Jul 2010
thts the better tax payation for u and this is from my knowledge.....
Wed Jul 14, 2010 6:18 am
Cash: $ 4.25
Joined: 26 Sep 2010
Location: Huntington Beach, CA
Yes I agree with coaster - getting paid individually would be a much better idea. Think about it, what happens if you got audited and those payments were brought into question... it would be documented you were paid, but would you have conclusive proof you paid your friend half of it? Furthermore, the IRS requires a filing if you pay someone more than $600 cash per year, and I suspect that *might* also be a potential problem in this situation if his share was in excess of that amount. Better to be safe than sorry, just keep it separate.