Today TaxMama hears from Michelle in Pennsylvania, who has this dilemma, “My husband was working and receiving $300 a week for 7 weeks. He was paid with a personal check. Do we claim that? Because his boss will not be claiming him, I was not sure.
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Some people told me no; some people told me he has to report quarterly. Any advice?”
Hi Michelle,
If you’re looking for someone to persuade your husband that you’re right, OK.
Yes.
Certainly.
Absolutely.
You do need to report all income in your tax return, even if your “boss” is breaking the law by not paying you properly as an employee.
In fact, his boss is ripping him off, by not putting him on payroll. As a result, your husband will report the income and pay the Social Security taxes that his boss should have paid – 7.65% of his income. When you pay Self-Employment taxes, you end up paying both your share of the Social Security AND your boss’s share.
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When you’re really, legitimately in business for yourself, that’s fine.
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But when you’re really an employee, that’s downright unreasonable.
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You can see what happened when someone else was treated unfairly by her boss:
https://www.taxmama.com/Articles-cur/ic-fight.htm
And you can read about how to fix the problem when you file your tax returns next year, here:
https://www.taxquips.com/index.php?id=10
Now, as to making estimated tax payments? $2,100 isn’t that much money, in the overall tax scheme. It’s not worth bothering with estimated payments. However, if your husband is going to spend more time freelancing, then, it will be time to start making quarterly payments. When that time comes, just search the TaxMama.com site for 1040-ES, and you’ll get all the tools you need.
And remember, you can find answers to all kinds of questions about self-employment, and other tax issues, free. Where? Where else? At TaxMama.com
[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the subscribe link and join us.]- Ask TaxMama :: Where taxes are fun and answers are free
- TaxQuips :: The number ONE free tax podcast online
- TaxMama Article :: Independent Contractor on the Warpath
- TaxQuip #10 :: SS-8 – or Dishonest Boss
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