“I clean houses, how do I file at the end of the year?”----> Unless you are properly incorporated, bonded and licensed in the trade and maintains "corporate formalities" as an independent contractor, you must receive a W-2 from your employer (family) and the employer must pay the payroll taxes as long his total payments in the calendar year meets the IRS household employment threshold ($1700 in 2011 I guess ;FICA Taxes, I mean, Social Security & Medicare Taxes (13.3% of Gross Wages - empyer may collect 7.65% from the employee via deductions. In 2011, the FICA tax rate for employees was lowered to 5.65%. The employer tax rate remained unchanged, while the Social Security rate for employees was lowered to 4.20%) State Unemployment Taxes where required Annual Federal Unemployment Tax (FUTA) Form 940 where required. Your employer is required to provide you with completed copies of their W-2 forms or by the end of January following the tax year. Your ER adds up the federal income tax withheld from your pay each pay period during the tax year. Your ER also withholds your state income taxes,i.e, state tax and state unemployment tax from your paychecks and pay to the state quarterly. So, you need to file your federal and state returns by Apr 15 2012 for your 2011 tax. However, if you are self-employed, then you are responsible for filing and paying estimated quarterly income taxes. This applies to Federal and state if your state has an income tax. Payments must be made by April 15, June 15, September 15 and January 15 of each tax year. Form 1040-ES must be filled out to determine your tax;as longa s the amount on 1040 Sch SE line 4 is $400 or exceeds $400, then you need to pat quarterly self-employment tax to the IRS on form 1040ES; also as long as the amount on Sch C line 31 is $400, then you neeed to file Sch C, and if you are filing as a sole proprier and/or a self-employed individual, you generally have to make quarterly estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. You do not have to pay estimated tax for the current year if you had no tax liability for the prior year :you were a U.S. citizen or resident for the whole year;your prior tax year covered a 12 month period.Yo also need toi file your 1040 by Apr 15 2012 for your SE income that you earned in2011. If you did not pay enough tax throughout the year,2011, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. IF you’re an EE, then you use Form W-4 to figure the right amount of federal income tax to have withheld from your paycheck. You need to calculate how many withholding allowances to claim on yoiur W4. For most people, this MAY be the same,but NOT exactly, as the number of personal exemptions they claim on their tax return. One point of confusion is the number of Form W-4 withholding allowances often does not equal the number of Form 1040 exemptions.
Please visit the IRS Websites here:
Self-Employment]Self-Employment Tax (Social Security and Medicare Taxes) Tax (Social Security and Medicare Taxes)
Estimated Taxes
“ Do I need to have my clients write a letter? I am paid cash usually. And I will be claiming two children.”-->No; as said above, your ER withholds taxes from your paychecks and pay them to the IRS and the state. You just need to file your return by Apr 15 2012. You can communicate with your ER by using Form W4 as said; if you have more than one job, if your spouse ALSO works, or if you itemize your deductions on Sch A , then you need to use the worksheet on Form W-4 page 2. Use this worksheet to calculate the number of allowances to claim instead of relying on your personal exemptions. When filling out a Form W-4, you, an employee, neeed to calculate the number of Form W-4 allowances you will claim, based on your expected tax filing situation for the year. For each Form W-4 allowance taken, the amount of money withheld as Federal income tax is reduced. This, in turn, reduces any tax refund you may be eligible for (i.e., if the funds were never withheld in the first place), or may even raise your liability for taxes due. No interest is paid on over-withholding. Penalties are imposed for under-withholding beyond a certain threshold, often based upon the amount of last year's Form 1040 tax. The IRS Withholding Calculator can also calculate withholding allowances more exactly.REMEMBER: a tax refund or tax rebate is a refund on taxes when the tax liability is less than the taxes paid. You can often get a tax refund on your income tax if the tax you owe is less than the sum of the total amount of the withholding taxes and estimated taxes that you paid, plus the refundable tax credits that you claim. When you get a refund, what that really means is that you've given the federal government an interest-free loan. You're just getting your money back.
Please visit the IRS Website here;
http://www.irs.gov/individuals/artic...96,00.html]IRS Withholding Calculator
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