General Question

DylanMueller's avatar

What are you required to claim on your taxes?

Asked by DylanMueller (205points) October 8th, 2011

I work for a company that sends out checks, without taxes being removed. I was told that I should save at least 25% of what I make for taxes at the end of the year, but is that even necessary? Is there a way for the IRS to really know that I am receiving this money if I don’t have pay stubs or anything like that? BTW I’m in New Jersey if that helps.

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8 Answers

CWOTUS's avatar

What kinds of checks are we talking about? Businesses do all kinds of payment by check, and there are relatively few times that tax withholdings are required. The major one, of course, is paychecks, which I presume is what you’re talking about here, but you need to be more specific.

Are you a direct-hire employee of the company? Or are you a contract-hire of some sort or independent contractor? If you’re classed as an independent contractor, then you’ll have to file an income tax statement showing your “corporate” earnings (if you’re set up as some kind of corporation), and include your income and self-employment taxes as well (including the personal and employer portions of FICA and Medicare tax, up to the earnings caps).

And yes, if you’re receiving this payment as any kind of employment-related earnings, then the company making the payments will send you (one presumes, based on the fact of you not being a direct-hire employee) a 1099 form so that they can deduct the payments made to you as a business expense. So there will be a 1099 form with your name on it, and IRS will be expecting an accounting of those earnings – and the tax due on them.

CWOTUS's avatar

If you’re a direct-hire employee and they’re sending out checks with no stub, no withholding and no record of hours worked, etc., then they’re evading taxes themselves (not “avoiding” which is totally legal and businesslike, but “evading”, which is criminal), and you could turn them in, take a cut of what the IRS recovers from them (it’s called a moiety) – and probably lose your job, too. But if they’ve evaded enough tax in this way for a long enough time, the moiety might make up for the lost income until you find another job. The moiety itself is taxable income, by the way.

YARNLADY's avatar

You need to make quarterly payments based on a formula provided by the IRS. Contact your local IRS office, or read the instructions on their website.

LuckyGuy's avatar

The IRS will probably know about it. The company will send you (and the IRS) a 1099 Misc form early next year. They are probably calling you an independent contractor.

dreamwolf's avatar

Erbody pays taxes. Since you gotta report how much your total income is, (even when you apply for cred cards) the IRS is watching you, tabbing you, so it’s really hard to trick them.

JLeslie's avatar

Ask the company if they will be providing you with a 1099 in January (it’s like getting a W-2) basically a statement of how much they have paid you over the year, and it is reported to the IRS. You should be paying quarterly taxes, and you might have a penalty for not doing it. If you make very little money, and won’t owe anything it might not matter. If they are paying you under the table, which is illegal, then they won’t report what they have paid you. Since they write you a check, I doubt they are paying you under the table.

If you have another job where you are an employee on payroll and they do take out taxes, and this other thing is on the side, the job removing taxes might have taken enough to satisfy any minimums for the IRS and at the end of the year you might just owe some money, but no penalties.

When I have worked independently, I did not always pay in quarterly we just raised how much they took out of my husband’s paycheck. It was simpler. Unless, I had a very large deal come through, then I would write a check to the IRS. We file a joint tax return.

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