Newspaper carrier required taxes?
I have been unemployed for a few months and I just now got a job being an independent contractor being a newspaper carrier. I am 18 years old and am being claimed as a dependent. I have never filed taxes on my own, my dad has been doing it all my life, but things are different now. I have to be able to ensure that my taxes get done correctly with these new changes. I will be attending a college in April and I am barely surviving right now. Hopefully that will change with this job.
(1) I need to know what taxes I have to pay, when I have to pay them, how I pay them, and how that all works. (2) What forms I have to fill out and when they are due. (3) If there are any deductions I can make to help me. (4) Any understanding of all this would be helpful!
As an independent contractor you are liable for not just income taxes, but also self-employment tax. The SE tax is a little hard to quantify right now because Congress lowered the tax for 2011 and the first two months of this year. If Congress lowers the tax for the rest of 2012, then the tax rate will be about 12.375%. You pay this tax if your earnings are more than $400 for the year.
Your standard deduction is your earned income + $300, up to a maximum of $5,950. That means you are not liable for federal income taxes until you have $5,951 of taxable income as a newspaper carrier. In other words, you may have to pay the SE tax, but not income taxes.
As a newspaper carrier, you may have expenses you can deduct, such as the cost of driving your delivery route. The per-mile rate for 2012 is 55.5 cents per mile.
Your income tax rate starts at 10%. The full rate chart is below:
Tax Bracket Single
10% Bracket $0 – $8,700
15% Bracket $8,700 – $35,350
25% Bracket $35,350 – $85,650
28% Bracket $85,650 – $178,650
33% Bracket $178,650 – $388,350
35% Bracket Over $388,350
This means if you make $11,000 delivery newspapers and had $1,000 in expenses, then your taxes are like this:
SE tax: $10,000 * .9235 * 13.4% = $1,237 (The amount of income taxable for SE taxes is reduced by 7.65%)
Income tax:
$10,000 – $619 = 9,381 (Adjusted Gross Income — you get to deduct 1/2 of the SE tax)
$9,381 – $5,950 = $3,431 taxable income
Your income tax would be $343.
Total taxes due: $1,580
If you didn’t have to file a tax return for 2011, then you aren’t required to pay estimated taxes, so you should set aside enough money to pay what you will owe for this year when you file your 2012 tax return next year.
Your state income taxes will probably be based on the $9,381.
I hope this helps.
Gary
1) Federal income and social security taxes plusstate taxes will be due each 4/15.But you should pay them quarterly to avoid penalties.2) Forms 1040 with Schedules C and SE due 4/15.Quarterly form 1040-ES due 4/15, 6/15, 9/15, 1/15.3) All direct expenses including auto – track mileage or actual expenses – mileage allowed is .555 per mile.
yes, as an independent contractor, on sch C and calculate your self employment tax on Sch SE
go to www.irs.gov and look at the C and see what you need to claim there, ie income, and expenses that are business expenses–for one thing, mileage
you might also find Publication at that site, read it down load it or order one a 1 800 829 3676 to help you prepare your taxes correctly
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