Independent contractor taxes

I’m a private contractor and I was hired out of state to do a project. The company is asking for $26,800 up front for taxes, before I begin the project. What are my options?

in progress 1 Answer

Answer

  1. 3 Answers

    An independent contractor is not an employee who entered into an employment relationship with an employer. An independent contractor by IRS definition is self-employed. Therefore, as being self-employed you are responsible to pay all federal income tax, state (residence and work location depending on state & local tax regulations) income tax, and self-employment tax (social security and medicare taxes), not the company that hired you. The employer does not withhold income taxes or pay unemployment taxes on a 1099 independent contractor’s wages. They also do not pay for or offer benefits to contractors as this is the contractor’s responsibility.

    I do not suggest paying $26K+ to the employer upfront for taxes before or after working for them. Again, you will be assessed taxes that you will pay to the government on wages received from this employer as a contractor AFTER they have reported wages they rendered to you as an independent contractor as issued to you on a FORM 1099. You would use this 1099 to report wages received and calculate how much income taxes you owe as a self employed 1099 independent contractor.

Leave an answer