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I am a minor in Michigan, and I'm currently in my first financial year. I work for a nonprofit, which doesn't take any money out of my pay. The per-hour salary that I say I make is how much I actually receive on my pay-day.

Because this is my first financial year, I want to be able to reasonably know how much I need to save for April. Is there a good way I could estimate the upper bound of what percentage of my income goes to taxes?

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    I can think of several reasons why they might not take out taxes: You claimed exempt on your w-4; or you are not an employee but a contractor. Neither of which is related to them being a non-profit. did you fill out a W-4? Do they take out anything else such as for medicare or social security? – mhoran_psprep Jul 23 '18 at 16:56
  • I'm not completely sure, but I believe I'm a contractor. They don't take anything at all out of my pay. – Julian Lachniet Jul 23 '18 at 17:06
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    Start with the worksheets included in Form 1040-ES. This should give you an idea of how much your tax liability will be for the year, taking into consideration exemptions/deductions, etc. Your gross income is your hourly rate multiplied by the number of hours you'll have worked this year, plus any other income (bank account interest, cash awards/prizes, etc). – CactusCake Jul 23 '18 at 17:09
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    Does my gross income include parental allowance or gifts? – Julian Lachniet Jul 23 '18 at 17:19
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    No it doesn't include money from your parents – mhoran_psprep Jul 23 '18 at 17:37
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From the comments it sounds like you are a contractor. So at a minimum you will owe social security and FICA along with what is sometimes called self employment tax. Social Security is 6% and the self employment component of Social Security is also 6%. Then you have FICA and the self employment portion of FICA as well.

I would recommend you engage an accountant. As a contractor you may be eligable for a lot of income reducing expenses. If the non-profit is a church and you are a 'church worker' possibly even more. Seek out an accountant that fits your profile.

After the first year you can use what you learned from the accountant to do subsequent years or you may find the cost of the account beneficial. It should not cost you more than a few hundred dollars and those may be deductible.

You also need to be making quarterly payments of estimated taxes or you may owe a penalty at the end of the year. The accountant can help with this as well. Being first year there may be more flexibility in this.

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  • That's a little confused. Employers must withhold half and pay half of Social Security (6.2% each) and Medicare (1.45% each) which together are called FICA (for the law that imposes them); self-employed must pay both halves which together are called self-employment tax (or SECA). Yes, there is an exemption from estimated-tax penalty (form 2210) if you had no tax liability the previous year, which I presume OP's 'first year' means. But you do need to have the money available in April, and if you will have any difficulty doing that, estimated payments are safer. Also remember state tax. – dave_thompson_085 Jul 25 '18 at 16:10
  • As a minor, an account isn't an option for me right now. – Julian Lachniet Jul 25 '18 at 23:02
  • If you are getting paid as a 1099 employee, in other words you will get a 1099 form to file your taxes at the end of the year, you need an accountant if you have never filed this way before. You don't need an expensive one, but as a 1099 you are much higher likelihood of being audited and need the help. You should be able to save most if not all the cost of the accountant with things that you will be able to deduct. As a contractor you can deduct milage for work, computer expenses, other things you have to buy for work, and the cost of the account against your raw income. Keep all receipts – Bill Leeper Jul 27 '18 at 17:12
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If you'll earn less than $12K then you won't owe Fed (or probably State) Income tax. You'll still owe self-employed SS & Medicare, though, which is about 12%. Thus, that's how much I'd save for taxes.

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