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    dude2011's Avatar
    dude2011 Posts: 1, Reputation: 1
    New Member
     
    #1

    Feb 4, 2011, 06:19 PM
    Why am I paying so much in taxes when I made less than 5K?
    Thank you so much for all the help!

    Here is the deal. I worked for an employment agency for three months. The lady said she pays all the taxes on my income, so I received a flat $10 per hour, clean. This was my only income for the year.

    She mailed me a 1099-Misc with Non-employee compensation (box 7) in the amount of 4370.

    The only other tax document I have is a 1098-T for tuition. I was billed 47K in tuition, minus 13K in grants.

    It says the federal taxes owed is $365! This is in the form of self-employment taxes. How did this happen? I was sure I was not paying taxes!

    Any help would be incredibly appreciated.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
     
    #2

    Feb 4, 2011, 07:19 PM

    For the ageny you worked as independent contractor and the employer did not withhold any taxes from your pay check so you will pay it now.

    1099-misc (nonemployee compensation) income: You will report your income and business related expenses on schedule C or C-EZ (Form 1040). Then you put net income (or loss) on line 12 of Form 1040. This income is subject to SE tax at 15.3% (this is shown on line 57 of Form 1040). For this you will use schedule SE (Form 1040). Even though schedule C treats you as a self employed, which may not be correct for you, this is how you report this income. Your U.S. Tax Return: Tax Filing by Self Employed Sole Proprietor or Independent Contractor
    ScottGem's Avatar
    ScottGem Posts: 64,966, Reputation: 6056
    Computer Expert and Renaissance Man
     
    #3

    Feb 4, 2011, 07:29 PM
    Quote Originally Posted by dude2011 View Post
    The lady said she pays all the taxes on my income, so I received a flat $10 per hour, clean. This was my only income for the year.

    She mailed me a 1099-Misc with Non-employee compensation (box 7) in the amount of 4370.
    She lied to you. If she gave you a 1099 she didn't pay ANY taxes. So now you have to.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
    Expert
     
    #4

    Feb 4, 2011, 07:34 PM

    Agree with Scott, she is not "paying" any taxes on you, and you were not paying any taxes in. You were treated as a self employed person.

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