I'm working a job where they don't take out taxes. I know that's supposed to be a benefit but it's stressful trying to figure how much to save for taxes. I feel overwhelmed when it comes to preparing for taxes!
About me:
I have an Accounting Associates' degree from a community college; I graduated with a 4.0 GPA. (However, I do not have real world experience–just knowledge and classroom simulations.)
You will need to look into your state and city to see if they have any Income Tax, and if so what percentage. To try and be helpful, this article lists the states that do NOT have income tax. https://www.usatoday.com/story/money/personalfinance/2014/04/26/these-states-have-no-income-tax/8116161/
Now, federal taxes are the same across all states.
Social Security: 6.2%
Medicare: 1.45%
FIT: [depends on your tax bracket, there are charts to help.]*
*Personally, I estimate about 5-6% for my FIT (I have 1 witholding).
An employer pays half of the total social security and medicare tax (15.3%) for their employee[s]. Assuming you are an employee of the business and not an independent contractor, multiply your gross wages** by 0.0765***.
** Gross wages - Amount of pay before taxes
*** The decimal form of 6.2% + 1.45% (SS + Medicare tax)
If you would, please let me know if this helps you or if you need/want clarification.
use the tools mentioned above and then make estimated tax payments… determine what the total owed for federal taxes might be, divide that by four and make four payments … if you don't have money withheld from your paycheck and you don't make estimated payments, you will get hit with a penalty
our system is "pay as you go" so most of your taxes should be paid by the end of the year… 100% of your previous year's taxes or 90% of your current year's taxes - whichever is smaller
more information is here:
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
How is an employer not taking out taxes beneficial? Is the IRS taking more than they have too?
@Miriam O. In some cases (depending on income mainly), yes. That is why there are yearly "Tax returns" [for those who file]. I believe the "supposed to be a benefit" is referring to the ability to keep those tax dollars in some form of savings/growth-vehicle, and earn the interest as tax refunds do not give interest back.
However, the other part of the equation is more frustration (as the original poster is having), and whether the interest earned is greater than inflation. ~~Really, there is some benefits to it…but I would dare say that the cons outweigh the benefits.
