Approx. $1000 a week, for about 6 months or so. $24,000. How bad will the taxes be? and I can still just file my taxes at the end of the year right? Or I HAVE TO pay quarterly?
Is only going to be around 6 months, would it be worth it to go through all that trouble with the withholdings and etc? So from the looks of it, I have to file quarterly? How come the accountant I spoke of keep saying I don't? Despite my efforts of telling her what I found online.
There are rules for withholding and penalties. If you pay as much as you did the prior year or 90% of what you owe, there is no penalty I believe (your accountant should help in this regard) and you can just pay it with your 1040. You can either increase your withholding at your current employer to compensate for the additional income or pay estimated taxes quarterly. Paying estimated taxes is no big deal as you just write a check and fill in a number on a form. If you want to avoid that, then go the extra withholding route.
Whether it is worth the trouble to incorporate is something your accountant can probably answer well. Deductions can take many forms. Office supplies, a laptop, a desktop, a new monitor, a desk, mileage, travel expenses, software, postage, hard drives, cleaning supplies (for your work space), etc. It can add up pretty quickly esp. if you are in IT like I am and can justify any technology expense related to a computer as being necessary. It is not a reason to incorporate in and of itself though. Generally getting the liability protection a corp offers you is the reason to do it.
The amount of taxes withheld is supposed to match your income level throughout the year. Lets say the OP works as a contractor the first six months of the year and decides to make quarterly payments. He should make those estimated payments the first two quarters of the year, makes sense right?
When taxes are withheld through payroll, they are deemed to have been paid evenly throughout the year no matter when they were actually withheld. So the OP can work as a contractor the first six months of the year and not withhold the $10K or so in taxes until the end of the year.
Not necessarily a huge deal but having the additional cash throughout the year has benefits especially business owners with cash flow problems. (I know the OP is not a business owner)
Are you going to be paid in cash? If so, do it "under the table."
My father does side jobs left and right and everyone always pays him in cash...he does offer a "cash discount." Hes never had any issues.
I'm sorry but if you're working on something as a side job or hobby, theres no reason you should have to pay the federal government money because of it.
I wouldn't say there is no reason to pay the government - since it is against the law not to claim that income. In my opinion, working side jobs here and there is different then working regularly for 6 months for 24K. Most legit employers are not going agree to pay you under the table so most likely it won't even be an option.
Last edited by brianl0202; 01-22-2013 at 10:38 AM..
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