FundRobot » Child Investment Accounts » My boss hasn't been taking federal taxes out?

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Old   #1 (permalink)
 
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Default my boss hasn't been taking federal taxes out

I have been working as a nanny for the same family since January 2013. When I was hired we discussed having taxes taken out of my check and I of course said yes. The other day my boss (the mom) made a comment saying "I almost forgot to do our taxes, have you done yours?" And I replied.. "I thought YOU were taking taxes out as my checks aren't as big as they should be if there were no taxes being taken out" She then went to explain that she has been taking Social Security and Medicare taxes out but it is my responsibility to pay "estimated taxes" each quarter. I kind of feel like I am screwed and have heard I will have to pay penalties, etc. Is this true and how do I go about fixing this situation? What kind of fees will be involved? Will I still get a refund in the beginning of 2014? I am very confused. At the end of 2013, I will have made around $27,000, maybe a little more. PLEASE HELP!! I have a son (single mom) who I will be also claiming on my taxes.
I live in Washington State so no State Taxes to be withheld!
I live in Washington State so no State Taxes to be withheld!

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Old   #2 (permalink)
 
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Default my boss hasn't been taking federal taxes out

An employer of a domestic employee is not required to withhold federal income taxes, even if you wanted her to do this.

With one child under age 17 and income of $27,000, you will not owe any federal income taxes if you qualify for the Earned Income Credit and Child Tax Credit. These credits will more than cover your taxes.

Apparently she is withholding 7.65% for payroll taxes. She is required to do that if she did not agree to pay all of it herself.
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Old   #3 (permalink)
 
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Default my boss hasn't been taking federal taxes out

She is right, they don't have to withhold federal, just SS and Medicare. Misunderstanding, though they should have clarified.

Nothing to refund other than EIC, you have currently paid nothing in. You need to do a 1040ES and make an estimated payment ASAP if it tells you to.
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Old   #4 (permalink)
 
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Default my boss hasn't been taking federal taxes out

as a household employer, she withholds the FICA, and income tax as you request
if you did not request income tax withheld, she is not required to do so
your non taxable income is $16550 leaving $10450 taxable
you will have $1K child tax credit to reduce the amount of income tax on that amount, you will also have the EIC credit to apply and if the child tax credit was not used up entirely, will be 'additional' child credit
there is no Wash State income tax
if this is your only income you are probably safe at this point
as for any refund, there first has to be money paid in which you have not done(or the employer) but as explained above you very likely will not owe any money
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Old   #5 (permalink)
 
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Default my boss hasn't been taking federal taxes out

You should get statements from her showing that in fact social security and medicare taxes are being paid by her. Otherwise if she isn't than she has broken your deal with her and it would then appear to the IRS that you are self employed. Being self -employed you would then be responsible to pay those taxes on your own. Your employer (her) matches what you would pay social security & medicare But if your considered self-employed you would then be responsible for the entire amount due. I would not worry myself to the point you can't sleep but you do need to get this taken care of without further delay. The key is to get statements of your earnings and taxes payed with each paycheck. If they are unwilling to do this I would be very concerned that they might be taking advantage of you and NOT paying the taxes per your agreement. Self-employment taxes are a bitch and expensive about 10% of your income...so if you can get them to pay per your agreement that would be great but you need to find out for sure that they are being payed otherwise at the end of the year you will be hit with an unpleasant tax bill. I learned the hard way having to pay when I first started to work for myself...really hit me hard. Anyway, you smart to be concerned and on top of the problem...at this point it's early and not much would be due but it will add up to be a lot latter on. I hope I was of some help to you and clear on my explanations...Good luck..Gary
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Old   #6 (permalink)
 
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Default my boss hasn't been taking federal taxes out

As a household employee, your employer is required to withhold Social Security and Medicare taxes but is not required to withhold federal income tax. The good news for you is that your tax liability should be right around zero. The Earned Income Credit with one dependent should get you a refund of around $1600 when you file your return in 2014. If you earn a little more, your refund will go down a little bit.
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