Tax Law Question for Independent Contractors

[DiGi]

I left my job earlier this year (they were not willing to let me work and go to school) and am going back for further schooling in the fall. Currently I am working in a running store, but recently received an offer from a company where a former coworker now works. This company told me they would be willing to let me go to school and work. I am not sure if I want a full-time job and full-time school (also not sure if I see myself at this company) so I asked them to let me work as a contractor through the summer and then decide if I want to work there full-time or not once I am closer to the start of school.

The question I have is that they want to pay me a flat hourly rate and have me handle all the tax issues. Does anyone know what tax laws apply if you work as an independent contractor for a firm in the US? What taxes would I be held accountable for? FICA, State and Federal? Any others?

I basically do not want to get screwed over or have a big surprise come January. If I am going to have to pay out anything additionally in taxes I will pick up another job I am considering (along with the running store).

thanks

 

[BAW]

Mr. BAW and I are considered independent contractors/sole proprietors and we are responsible for federal and state taxes...we don't pay FICA. You start paying on income above $600 and must pay your taxes quarterly. Some industries require you to have liablity insurance too.

If you pay your taxes quarterly, you shouldn't have any problems...the trick is to estimate what you owe without underpaying. The penalties are harsh!

 

[DiGi]

thanks for the info - maybe I should just call the IRS and have them help me out with what I need to do.

 

[BAW]

Good idea


www.irs.gov has a lot of helpful info too

 

[nbcrusader]

Careful. They may call you a contractor, but the nature of your work may really make you an employee. If they tell you how to do your job, set hours for you, etc., then you really are an employee.

 

[Hewson]

You may also be required to supply your own worker's compensation policy.