Q & A: When filing quarterly taxes as ... - Finance information

Question by Wizkid : When filing quarterly taxes as independent contractor in PA at what percentage do I have to send out ?
I?m in college and working for a tech company as to independent contractor. How do my taxes work? I?m new to this. Do I have to pay income tax as well as self employment tax or no? Best answer:

Answer by Count Your Blessings For tax purposes
, employees receive wages subject to income tax Which are various payroll and taxes for Social Security, Medicare, and various state and local taxes. Indept contractors are also subject to the income tax and to the self-employment tax, Which covers Social Security and Medicare. There?s two big differences here for you as to Indept contractor. One is that employees are taxed on the full amount of their wages, independent contractors are taxed Whereas only on their net profits (after business expenses are deducted meaning). This can result in a lower tax liability for Indept contractors. On the other hand, companies are required to pay payroll taxes for have the Social Security and Medicare for employees. Contractors are required to pay Indept both the employees and employers share of these taxes, and the client would not have to be responsible for any of these taxes. Companies that are looking to keep their expenses low overall often prefer to hire contractors Sun the company will not have to be on the hook for payroll taxes.For the federal government (IRS), you?ll use the IRS Form 1040ES quarterly estimated tax to calculate your payments.If you expect more than $ 8,000 of PA taxable income in the tax year, Which will not be subject to employer withholding (interest, dividends, gains, self-employment income), you must make PA Estimated Tax installment payments. This commission is part of the law governing the personal income tax. [61 Pa. Code subsection 115.9 (a)].If no estimated payments are made, you must pay the full amount due with your PA income tax return and you are subject to payment penalty on underestimated.To avoid this penalty, you can make estimated payments equal to the safe harbor amount by:* Making four equal, timely estimated payment equal to 100 percent of last year?s total taxable income rate multiplied by the current year?s. To use this safe harbor, the taxpayer must have filed a full year return in the prior year.For example: If last year?s total income was $ 20,000 and this year?s tax rate is percent 3.07, your safe harbor amount is U.S. $ 614.00 ($ 20,000 times .0307) Therefore, you should make four equal payments of $ 153.50.* Making estimated payments equal to at least 90% of your tax due for each quarterly period of the tax year.If you received your income unevenly and you did not make equal payments throughout the year, you may have to claim your safe harbor by completing a REV-1630.Use form PA-40ESR to make your initial estimated payment. The mailing address for payments is estimated:PA Department of RevenueBureau of Imaging & Document ManagementPO Box 280 403Harrisburg, PA 17128-0403Hope this helps!

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