Did You Know?
Now is the time to prepare for the 2022 tax season that begins in January 2023. Do you work for an employer that pays you and reports your earnings on a form 1099-NEC instead of a W4, or doesn’t give you a form at all? If so, no taxes are withheld for you, and this may be an issue when it comes time to file your tax return.
Even if you don’t think you make enough to pay income tax, you will be required to pay payroll taxes and that’s a huge 15.3% or $15.30 for every $100 you earn. When your employer pays your wages and reports them on a W4, they are paying their half of the payroll taxes (7.65%) and withholding your half (7.65%), and sending that money to the IRS on your behalf. If you are receiving a 1099-NEC, or no form at all, no money is sent in for you. This means you will owe it all next year after you file your tax return. We recommend that you plan now to set that money aside so it is available for your tax liability next January.
Next month, we have some tips for ways you might be able to reduce your tax liability if you receive a 1099-NEC or no form at all.
Certified Tax Preparer and Site Coordinator for Lowcountry Area VITA Coalition
United Way of the Lowcountry partners with the IRS to sponsor the Volunteer Income Tax Assistance (VITA) program which is staffed by trained and certified tax preparers who will accurately prepare your return, answer your questions, and electronically file your return, all for free.