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This is my first time paying/filing for taxes.

Starting April 2013, I started getting paid as a part time independent contractor. When I get paid, nothing is withheld.

I have no idea when to pay taxes and how much to pay. What forms do I have to fill out?

I know that this January is "tax season" but that seems to be for returns, not actual payment of taxes.

I read the various forms on the IRS website, but it's so damn complicated. I'm not sure if I need a 1099-MISC, a 1040A or 1040EZ or 1040ES or a W-2.

Heck, I don't even know what type of taxes I need to pay. Income? Self-employment? Social Security?

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    Have you heard of an accountant? – Victor Jan 6 '14 at 21:04
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    Now is a really bad time to shop for accountants... All the good ones are taken, or will charge you some. But do hurry, the real tax season starts in February, so you might still be able to secure a spot with a decent tax adviser (EA or CPA licensed in your state). As Dilip mentioned, Jan. 15th is the deadline for the last 2013 quarterly payment, get an accountant ASAP to help you calculate how much to send. – littleadv Jan 6 '14 at 22:50
  • It depends on how much you make that determines where you have estimated taxes due 4 times per year. If you are an independent contractor, remember you also have to pay self employment tax. A salaried employee would typically pays 6% while the employer pays the other 6%. You as an independent contractor have to pay 12%. If you have your taxes prepared, they will be able to determine if you will owe estimated taxes and provide the paper work to submit when they are due at different times of the year. – Sun Jan 7 '14 at 0:16
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I strongly recommend that you talk to an accountant right away because you could save some money by making a tax payment by January 15, 2014.

You will receive Forms 1099-MISC from the various entities with whom you are doing business as a contractor detailing how much money they paid you. A copy will go to the IRS also.

You file a Schedule C with your Form 1040 in which you detail how much you received on the 1099-MISC forms as well as any other income that your contracting business received (e.g. amounts less than $600 for which a 1099-MISc does not need to be issued, or tips, say, if you are a taxi-driver running your own cab), and you can deduct various expenses that you incurred in generating this income, including tools, books, (or gasoline!) etc that you bought for doing the job. You will need to file a Schedule SE that will compute how much you owe in Social Security and Medicare taxes on the net income on Schedule C. You will pay at twice the rate that employees pay because you get to pay not only the employee's share but also the employer's share. At least, you will not have to pay income tax on the employer's share.

Your net income on Schedule C will transfer onto Form 1040 where you will compute how much income tax you owe, and then add on the Social Security tax etc to compute a final amount of tax to be paid. You will have to pay a penalty for not making tax payments every quarter during 2013, plus interest on the tax paid late. Send the IRS a check for the total.

If you talk to an accountant right away, he/she will likely be able to come up with a rough estimate of what you might owe, and sending in that amount by January 15 will save some money. The accountant can also help you set up for the 2014 tax year during which you could make quarterly payments of estimated tax for 2014 and avoid the penalties and interest referred to above.

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    One correction: You do not only report your income based on 1099-MISC you received. You only receive 1099-MISC from those who paid you $600 or more, but those who paid you $500 - still paid you money that you're required to report. Do not rely on 1099 to report your income, make sure to report all the income. If during audit the IRS agent discovers that you only reported income on 1099, but didn't report any other income you had - you may be charged with fraud. – littleadv Jan 6 '14 at 22:47
  • @littleadv Thanks for the correction. Given the OP's level of understanding of the situation, I was more concerned about trying to ensure that he was not going to blow off some 1099-MISCs and not report them at all, but yes, required reporting of small (non-1099-MISC) income items is also an issue that the OP needs to be reminded about. – Dilip Sarwate Jan 6 '14 at 22:56
  • Can any self-employed person wait until January 15 to make estimated payments? Or do they have to make quarterly payments in some cases? – user102008 Jan 7 '14 at 1:43
  • Thanks Dilip, much appreciated. I have a related question. If I'm self employed, do I need to somehow officially start a business? What I mean is, do I have to get a business license? The thing is, this contract position started as an internship and turned into part time work after graduation. Since the start though, even as an intern, I was hired as an independent contractor. – ShrimpCrackers Jan 7 '14 at 3:56

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