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  • Paying Taxes???

    I have always had taxes taken out by my employer. Which I prefer. At my current place of employment I have to do that myself. I pay at the end of the yr. which is a nice little chunk of money.

    Last yr. I wanted to see about getting pre-approved for a home loan. There was no record of my year to date salary. The lender told me that I needed to get the info. from my boss before we could continue. I tell her what I need. She gives me a written out list of what my pay had been for the past 6 mo. on notebook paper. I was like, UMMM, I dont think this is gonna work. She said. "Tell her I'm old school and this is how I do things." I told her that the rest of the world isn't "old school" and I didnt think it would work. It didn't. We went to her accountant after calling many times with no response. I told her what I needed and gave her a fax number. This was in Nov. and still haven't recieved anything. The lender told me that she thought legally I needed to pay my taxes quarterly. I'm really not sure what to do at this point. Any suggestions would be greatly appreciated.

  • #2
    An EMPLOYER must legally withhold taxes.

    A business contracting your services does not withhold and you should be providing them actually with an invoice, we haven't talked much about that around here either. You are in business for yourself and should be giving the owner a business invoice from yourself. Then you get a 1099 for each calendar year from the business contracting you. YOU MUST FILE a long form 1040, Schedule C and Schedule SE at minimum, and the SE is where you pay DOUBLE Social Security...see note below.

    Therefore, if nothing is being withheld you are self employed, and PAY DOUBLE "Social Security" deductions you would have seen on a paycheck as withheld.

    You are typically liable, depending your state, county and local government to pay self employment taxes which radically vary by name and amount and type by state.

    Not treating a groomer as an employee means the "employer" doesn't have to pay their 50% share of the DOUBLE Social Security, and various workers comp, state and local taxes.

    THIS IS THE REASON THEY CALL YOU IC UNLESS YOU HAVE A TRULY LEGAL BUSINESS WITHIN THEIR BUSINESS. The employee simply files their W-2. Their employer CONTRIBUTES the other 50% share of Social Security "double" amount. IC's have tons more SELF EMPLOYMENT paperwork, sometimes licenes, insurance, estimated tax payments, and the groomer has to pay DOUBLE Social Security.

    It ONLY benefits the "real" employer, and in 99% of cases, both the "real" employer and "I didn't know that" employee actually IC, are major setups for penalties and interest. The "real" employer gets slammed hard, but the IC really employee IF they paid double Social Security etc is held responsible but may have paid in enough to cover things, but they usually get audited.

    HOW FUN OF THOUSANDS OF EMPLOYERS JUST TO SAVE A FEW BUCKS PER PET RISK SO MUCH TROUBLE AND SETUP THEIR GROOMERS TO PAY WHAT IS REALLY, TRULY, EMPLOYER CONTRIBUTIONS.

    Generall keep in mind, if there are NO withholdings, you didn't get a paycheck, so you are self employed and better make sure you are paying EXTRA taxes beyond what would have been withheld, those are self employment taxes, and you better make sure if you need a business license, registrations, insurance, etc. What a mess...all from lack-full thinking. I've seen so many groomers hurt by this time and time again, losing businesses, liens on groomer IC homes etc who didn't pay the SE taxes etc. Very sad.
    Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

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    • #3
      Stephen you don'y pay "double social security"...you pay in the net not the gross like a traditional withholding, it works out to be about the same.

      Stephen: Yes you pay around 7.65% TWICE on the net. I do know, I filed that way for 25 years but wasn't clear enough here. Thanks for making it clear. Yet, keep in mind, that's the double I am talking about and for some groomers that is far more cost than having 7.65% of their gross taxed, and once again, who did that really favor, the employer saying they are not an employer. For example I have a groomer's books here and she paid 15.3% on her net, but she had very few write-offs so in effect it was like paying about 12% on what would have been her gross wage otherwise.

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      • #4
        I know that I am not paying anything into S.S. or Unemployment. I am... according to my boss. Considered a "private contractor". As far as needing a business license. I have no clue. I'm feeling a bit overwhelmed now.

        Stephen: Generally, whatever you spent on personal goods, rent, your car, mortgage, your food, your clothers, your movies, your personal vacation, your personal gas was a "draw" on the business, your IC status for example, and that spending is AFTER PERSONAL TAX dollars and SS should have been paid on those dollars, UNLESS you did that spending out of your savings already taxed in a previous year. That's a real rough and general statement. Everyone owes SS on money earned that then becomes personal spending one way or another, let alone other possible state taxes on that personal spending money. Unemployment can be optional for IC business owners, but, for example in WA state, every dollar gross to a business or IC is taxed, BEFORE write-offs, NOT net. Fortunately small business and IC's get some credits to offset that tax, but it is reported. So if you were given money from this "boss" and the boss did no withholding SS and income tax, the net amount after business expenses is subject to SS and income tax, and if any of it was spent on anything personal like rent etc again, in general depending upon other credits you may get, the dollars saved out of checks or spent for personal should have been accounted for and subjected to SS and other self employment taxes. I cannot tell you in 20 years as a consultant how many groomers that don't get professional bookkeeper and/or CPA assistance nearly always are underpaying their true tax liabilities. That's why this is an issue with me because it is still derived from what, employers saying they are not employers just to help themselves and not their "employees." My files contain at least 1,000 groomers that got into this trouble with the IRS sometimes years later when the employer got caught. Oh yes, and they say you have to save your records only this or that many years, oh I have seen in these cases the IRS go back 15 years. They even once said we made a $10 error on our 941 report where we report withholdings from our employes and fined us $1,500 etc. Well they didn't know my mom. We had the original 941 that was at least 15 years old and that's how we got off the hook. We keep records for 20 years now based on what I have seen as a consultant where you have employees.

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        • #5
          I apologize if I have been going off here, but this really does rankle me.

          Personally, you deserve a special respect for being self employed, whether an IC or an owner with staff. It's a lot of responsibility, it requires special maturity, and some passion and lots of patience. Therefore I expect the self employed person to put time aside to earn that respect by accepting the responsibilities associated with that respect.

          I respect employees for their work and being a responsible employee, but they do have it a little easier don't they. Tons less paperwork, when the clock strikes end of the day, they can go and forget work even till the next shift. Not so with the self employed.

          Therefore, knowingly setting up "employees" as IC's when it isn't legal is harming grooming employees. They came to me with the mind of an employee and that is fair. To know as a business owner I am saving a few bucks for ME by putting what should be employees in harm's way as an IC knowing they have no knowledge of the extra costs and responsibilities is simply savage. Some of these people have children and sometimes they get caught and there is no out and suddenly mommy or daddy owe THOUSANDS in penalties and interest, that hurts, that ruins the love for grooming, all so some business owner could pocket some extra bucks. I know, they call and they go 5 years of installment payments, and what about their kids? It's one of the most rude things that a business owner can do taking advantage of groomers who don't know better.

          I suppose that's why we had employees stay 10 to 15 years quite often. We did our job to fill the appointment 362 days of the year including several evenings a week, and had bookkeepers, attorneys and CPA make sure everything was perfectly in compliance. We never put employees in harm's way to save a few bucks. Be an employer when you are, and pay the employer taxes, raise prices to cover the cost and do this for the sake of your employees.

          OK nuff said but I expect at least 50 calls in 2010 like I got in 2009 from groomers called IC's that are in trouble. I don't even charge them. They are in do do already.
          Most questions regarding GroomerTALK are answered in the Board Help Talk Forum. Thanks for coming to our community a part of PetGroomer.com https://www.petgroomer.com.

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          • #6
            What do you suggest I do? All I know is that I get a 1099. I file and then the state and government send me a letter of what I owe. This will be my second yr. of doing this.

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            • #7
              Mitch, tell your boss you want to be treated as an employee. Have him/her withhold all taxes and provide you with a W2 at the end of the year.

              Better yet, find a new place of employment! Your boss is not very ethical and will be surprised of what it costs to actually have an employee when he/she has to start paying the payroll taxes!

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              • #8
                I'm working on a new place of employment and am hopeing that it works out.

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