Tuesday, June 24, 2008

How does it work if you work freelance and ask to be "taxed monthly?"- see explanation below

How does it work if you work freelance and ask to be "taxed monthly?"- see explanation below.?
I work in the entertainment industry on a job to job basis, so I'm paid by many different payroll companies and can choose my exemptions per job. My monthly income varies, sometimes I make a lot, sometimes not so much. Am i being taxed as if I'm always making the larger amount? Some of my friends have started putting 'tax monthly' and they say there is a difference. Just not sure how it works. Thanks for your help!
United States - 2 Answers
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1 :
They put "tax monthly" where? If they request to be paid monthly, then their tax would be based on their gross for that month, so wouldn't fluctuate as much as being paid weekly, for example, if the income varies a lot from week to week.
2 :
If I'm understanding correctly you fill out a new W-4 with each job and the taxes are held out based on what you file for each job. So, the taxes should be figured per company. For instance if one company pays you $500 one week and you have marked single with 0 exemptions then their payroll system should hold out the taxes required for a single person with 0 exemptions making $500 a week or $26,000 a year. Let's say another company pays you $1200 one week then their payroll system should hold out the taxes required for someone making that each week or $62,400 a year. I don't know what tax monthly means. There could be something that I'm missing here. I'd suggest you go to www.irs.gov and search tax monthly and see what you can find. Also, be sure these companies are holding out taxes and not treating you as an independent contractor or else you'll end up owing a lot when you file in April

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