Tax Question/Self Employment

Hmm...my first thought is to just take the cash and not declare it. You may consider putting in an anonymous call to your tax department to find out what percentage is required, but until you actually have a registered business, I would ride the undeclared income wave. Also, I believe you do not have to pay any tax if you make under a certain amount of money. In Canada, it is $30000/annum. Best to call your tax people though to find out the laws, and if you really want to play it straight and narrow, you can put aside the proper amount each month into a fund that you can use down the road, should they want to come for back taxes, once you are registered.

If you're working for your father, shouldn't he be taking the taxes and SS business out for you? I wouldn't fool with the tax people, I'd find out the correct methods and act accordingly.

Question:

If you're working for your father, why are you calling yourself
"self-employed"?

Because he/she does not have an employer in terms of texes etc. This is generally called "self-employed".

Take 20% of your salary and put it aside into a savings account. Self-employed folks can file quarterly with the IRS ~ most likely you will be due a refund.

Visit your local tax office for the proper documents ~ it's a simple procedure to file.

Should you decide to stay 'under-the-table', just remember that you can't claim your employment at your present job (legally) because you haven't paid any taxes. Voids in employment are usually considered when hiring.

Granted, a lot of employers don't take this into consideration, but why take the chance? You might come across a job opportunity that warrants background checks, etc.

Good luck with your endeavors.

jg, You can work for your father as a independent contractor, and pay taxes on your own. You can pay your taxes on a quarterly basis for both federal and state taxes. The idea is to pay at the very minimum 90 percent of your tax liability through your quarterly payments to spare yourself from penalties and interest. You can estimate your annual income and pay your tax liability accordingly. YOu can adjust your quarterly payment up or down depending on what your annual income will be. You may also wish to consider paying for the state disability insurance. It's an excellent way to cover yourself in the event you become disabled from work. c.i.

What c.i. said...also, as your father does not run a registered business, you would, I believe have to file a return as an independent contractor. However, I also believe that only a declaration of personal income is required, as you do not technically own your own business.

What c.i. said. If you can anticipate your income, pick up a Circular E at any local IRS office. It is also possible to order over the 'net. Once your self-employment exceeds $400.00 per year you will need to file a Schedule SE with your tax return and pay both the employee's and employer's social security taxes. As this amounts to something like 15.5% on the first dollar of income, be sure it is factored into the rates you are charging.

You are self employed. Keep good records of deductable business expenses. You will file the full 1040, with several schedules at the end of the year, and expenses are good.

Sorry maxsdadeo....I am self-employed, and those thoughts do creep into your head, especially when cash is offered. However, my business is registered, and all taxes are accounted for. It doesn't stop the "are you sure you need to charge us tax if we pay you cash" questions. Tempting, yes, practical, no.

I know Cav, I was just funnin' ya.

It is an American citizens Constitutional Obligation to pay as little tax as possible, but it must be done legally, as you have attested.

Yeah, thankfully, this year I got off even....nothing back, but nothing owed. Not bad.

Not bad?

That's perfect!

(Your a pro..............)

Thank the wife, she fired the accountant and did it herself last year

Nothing back but nothing owed is not quite the same as having paid no taxes. Good planning, but not quite perfect.

roger: Without performing any unnatural acts, that is often the best that can be expected.

All I know is that I owed them for 2 years, and last year I didn't owe a thing. I was happy with that.

When one's income fluctuates from year to year because they are doing consulting work or work as an independent contractor, the trick is to prepay taxes by your quarterly deposit to end up the year owing nothing, and minimizing the refund. c.i.

I file quarterly for GST and PST, it's a big help.