I'm a Temp Sub-Contractor: Off-topic discussion forum: Grassroots Motorsports Magazine

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July 20, 2008 8:18 p.m. PHeller New Reader

and I'm a college student.

Basically I'm working for a guy who is a general contractor a million dollar company. Said company has many investments including land and real estate. The general contractor they hire does building renovations, property maintence, landscaping, basically anything the million dollar company wants him too.

He only has a few actual employees, and hires mainly sub-contractors do his jobs.

As a general laborer, I'm a sub-contractor. He doesn't withdrawl any taxes on my behalf, and cuts me a net-income check.

What do I need to know for taxes and to protect myself against possible problems?
July 20, 2008 8:23 p.m. Dr. Hess SuperDork

Put aside a MINIMUM of one third for taxes. Go to the IRS site. DL the quarterly taxes forms. You will have to pay double SS tax, Medicare tax, tax on tax, etc.

Oh, and most so-called "sub-contractors" are not sub-contractors when it comes right down to it. You're getting screwed. Have phun.
July 20, 2008 8:25 p.m. stuart in mn Dork

He's supposed to give you a 1099 form showing what he paid you, and you're supposed to pay your own income taxes. Here's a page on the IRS website that explains some of it. http://www.irs.gov/pub/irs-regs/subcontractorstext.prn.pdf

Note that a lot of contractors call the people that work for them subcontractors instead of employees, to get around having to pay for workman's comp, etc. You may want to do a little research. The IRS website does touch on that subject
July 20, 2008 8:26 p.m. PHeller New Reader

I would think as a college student with very little yearly income I'll actually get to keep most of my taxes, right?
July 20, 2008 8:28 p.m. nocones New Reader

A lot.

I did my taxes one year with some "stated" income. It was a pain in the rear. You have to fill out like 4 extra forms. However the IRS seems to have a good instructions that walk you through it. I know I did federal 1040 long form and it had instructions for Self employed individuals. Basically I assumed I had to fill out every form that the form 1040 refferenced and read through the instructions on the other forms to verify that I did not have to. Also be prepared to pay the taxes that would be due, and the Social Security at the end of the year. Also you should strongly consider filing the forms to make 1/4 year payments on your taxes, otherwise you will get a fine at the end of the year if either your taxes paid (as in money in the hands of the IRS at the end of the year) are less than 100% of your previous year taxes, or less than 90% of this years taxes owed. The fine isn't huge, but it might make the IRS look at you closer, which is never good.
Record all your pay. I didn't and had to add up all my bank deposits during the time I was employed. I had no way of knowing which was what, So I payed taxes and SS on both income and Grandma's birthday money.

LIke I said, I did this once, two years ago, and the IRS hasn't shown up yet. So I'd start with 1040, and just fill out everything they tell you too. When in doubt, HR block!

Good luck.
July 20, 2008 8:56 p.m. Dr. Hess SuperDork

You may get to keep most of your federal income taxes, but you'll still get screwed on SS x 2, medicare, etc. What's SS these days? That's like 12% right there, plus the medicare. You're caught up in part of the illegal alien problem where "income tax" was eliminated for low wage earners, but they nail you on SS and Medicare, which are flat and have no deductions or refunds.
July 20, 2008 9:05 p.m. PHeller New Reader

Why do I as a sub-contractor have to pay twice the SS when I'm an employee have only pay normal amounts?

I'm not technically a business, so I'm not really self employed, or am I?
July 20, 2008 9:17 p.m. Josh Reader

Because normally your employer pays one share and you pay one share. In your case, the employer isn't paying a share, so you get to pay both :). Awesome.
July 20, 2008 9:47 p.m. Strizzo Dork

and yes, technically you are self employed if you are a contractor. i did it a few years ago and (this was in texas, so no state income tax) i figured i needed to save something like 18% of my pay to cover taxes at the end of the year. you have to pay both sides of the SS, but theres a deduction or credit or something that gives you back half of it if you are self employed or made less than some amount (if you aren't eligible for this, you'll have to save 26%[plus any aplicable state taxes for where you live], iirc)

its kindof a pain in the hind end, but as long as you make sure to save plenty for tax time, you should be ok aside from filling out a few extra forms. also, you should also be able to get a deduction equal to the amount you spent on tuition and fees during the year as well. this can help bump you down to the next lower tax bracket a lot of times, since its usually a good chunk of change.
July 20, 2008 11:51 p.m. Jack SuperDork

YOu do get screwed on the visible tax portion, but you do gain some neat 401k type programs. It may look like a royal screwing, but if you can get into some decent money, there are some decent advantages to offset some of the bad.

Jack
July 21, 2008 7:09 a.m. triumph7 New Reader

Its not as bad as it sounds. Yes, you are self-employed. Yes, you will have some extra tax forms (no problem if you use Turbo Tax). Yes, you have to pay the employer portion of Medicare. BUT Wait there's more! Keep all your receipts for tools, work clothes, etc. and keep track of your mileage driving to, from and on the job... it's all deductible. The more you deduct, the less you pay... maybe down to nothing. YMMV.
July 21, 2008 9:55 a.m. Strizzo Dork

also, if your employer sets your hours, supplies all of your tools, and tells you exactly how to do your job, you're probably not really a contractor
July 21, 2008 10:22 a.m. aircooled Dork

Yes, make sure you keep track of expenses, using these deductions is the big bonus of being self-employed. In fact I am sure there are many who have "businesses" that they barely keep afloat (I think you are required to show a profit 1 out of 5 years or something like that) just to get the business expense right offs.

Classifying people as contractors is usually a dodge. Microsoft got nailed for this in a big way a few years back. They had some very long term "contractors" that worked in there offices almost exactly the same as the standard employees, well, they of course didn't get any benefits. There are rather specific rules to being a contractor, one of them is that in general you are contracted for a specific task and it is up to you as to how and when you get it done (as long as you fulfill the contract).

I suspect since you are in school you might be getting health insurance from you school, just be thankful you don't have to pay that independently! You thought SS / Medicare was bad!
July 21, 2008 6:59 p.m. SVreX SuperDork

You're getting screwed. I'm a contractor, I should know.

According to the IRS, you are either an employee or self-employed. No other options. If you follow through with this, you will get beat up when you file your taxes. My son did this last summer. He should have paid nothing, but got walloped for over $1000 in self-employment taxes for only 1 summer's work.

You won't generate the income to have be able to have enough expenses to offset the tax burden.

Based on your description, you are definitely not a sub-contractor. You are an employee.

In addition to the tax burden, you also have a right to things like overtime pay, worker's comp insurance if you are injured, and unemployment insurance, all of which he is trying to cheat you out of.

What he is doing is illegal. Report him to the State Department of Labor, and find a real job working for someone who is prepared to pay you in accordance with the law.

Or wait 'till it is over and file for unemployment. That will get him.
July 22, 2008 9:24 p.m. PHeller New Reader

Yikes.

Ya, I just got a check in the mail. It's a straight check, no tax information or anything of the like.

I don't have health insurance and get no benefits from school or parents. I've been too lazy and have had trouble maintaining a reliable income to be dishing out monthly payments on health insurance. I DONT NEED A LECTURE ON THIS, thanks though.

What can I ask him to do to save myself?

Basically, I need to call him tomorrow and say "hey, I need X, Y, and Z, or I won't be able to work for you."

I don't need this bullE36 M3.
July 22, 2008 9:35 p.m. PHeller New Reader

btw I'm only working for 4 weeks, so we're looking at less than $2000 bucks income
July 22, 2008 9:50 p.m. Strizzo Dork

if you tell him that he has to make you an employee, it likely won't go well. is the job still a good deal if you get paid 1400 bucks instead of 2000? because thats whats gonna happen
July 22, 2008 9:51 p.m. PHeller New Reader

It's either that or I don't work at for the next weeks, because the likely hood i find a full time job in the amount of time is slim.

I've got vacation on 8th, visiting with family get together 19-23, and school starts the 25th.

I just need to hold on till school jobs start hiring.
July 23, 2008 3:41 p.m. aircooled Dork

Hell, if this guy wants to cheat, tell him to pay you under the table (no 1099) so you don't have to pay any taxes.
July 23, 2008 3:51 p.m. Dr. Hess SuperDork

He wants to cheat and not pay SS, unemployment, worker's comp, etc., but he wants the tax deduction for PHeller's labor also. He wants he cake and eat it too.

P could say: "Yo nombre esta 'Phillipa' e yo tiene neciseeeto cash-a-mundo.' Then I believe he'd be entitled to free health care, free lodging at various sanctuary cities, and pleny of other goodies like sheep.