Saturday, April 23, 2011

Why do I risk having to give more tax money before April 2008? Can't my employer just not make mistakes?

And if I work more than 30 hours a week, I would usually be entitled to benefits, right? What exactly do people mean by "benefits"? Health Insurance, Dental? Give me general examples.
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You need to check with your employer to make sure you are not a "contract employee". If you are, the risk you are taking is that you will have to pay all your social security and medicare tax (plus any income tax owed) in April 2008. You can pay estimated taxes throughout this year to cover next years taxes. Also, if you are a contract employee, you are considered self employed and would most likely not be entiled to any find of "fringe" benefits, no matter how many hours you worked. One easy way to determine if you are a contract worker is to look at your paycheck stub (if you get one). The statement should show withholdings for SSI and Medicare (sometimes called FICA) and your paycheck is less than the horly wage times the number of hours worked. If you don't see anything like this when you get paid, your probably a contract worker. If you are an employee, the comment about having a risk to owe taxes next April may have been a reation to your W-4 form that you turned into the boss when you got hired. If you put an unusally large number of exemptions, or wrote in the word EXEMPT on the form, you will have very little taken out of your paycheck. Your boss does not know what your individual tax situation will be for the entire year and they will use your W-4 to calculate withholding tax. It's not their responsibility to ensure your taxes are paid, you are! If you are unsure about what you put on the W-4, your boss should be able to tell you what you turned in. I would then suggest you visit an tax preperation firm that also helps with financial advice (like H&R Block, etc.) where they can look at your entire tax situation and help you fill out the form correctly.
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