What To File?

[Shaki]

What is the name of your state? New York

Just wanted to say first, I have never filed taxes as I recently turned 18. I worked since January as a freelance web designer up until now. I recently got a job that pays me a bi-weekly salary, but doesn't deduct taxes.

I know for a fact, I will file all my freelance income. But I have a few questions about my new job income:

1) Since its "off the books" - should I file it?
2) If I don't file it, when I deposit the paycheck (excludes taxes), can I leave that money in the bank? Or should I take it out?
3) What would be the best thing for me to do?

I really don't want to get myself or the employer in trouble - the only other reason I do not want to file, I won't be eligible for student loans.

Just looking for advice, thanks for reading.

 

[abezon]

Failing to report & pay taxes on all your income is a crime. I suggest you save 25% of the gross to cover taxes. Keep good track of your expenses to minimize your income & tax bill legally. You might consult with a tax pro about what kind of expenses you can deduct & what records you'll need to keep.

 

[tranquility]

Not to mention the fraud when you fail to report the income on your student loan application.

 

[LdiJ]

What is the name of your state? New York

Just wanted to say first, I have never filed taxes as I recently turned 18. I worked since January as a freelance web designer up until now. I recently got a job that pays me a bi-weekly salary, but doesn't deduct taxes.

I know for a fact, I will file all my freelance income. But I have a few questions about my new job income:

1) Since its "off the books" - should I file it?
2) If I don't file it, when I deposit the paycheck (excludes taxes), can I leave that money in the bank? Or should I take it out?
3) What would be the best thing for me to do?

I really don't want to get myself or the employer in trouble - the only other reason I do not want to file, I won't be eligible for student loans.

Just looking for advice, thanks for reading.

I agree with the other two responses, and will add:

Your employer will likely give you a 1099 misc at the end of the year. Therefore the IRS will know about the income. It will be treated as self-employment income, just like the money you earned as a freelance web designer.

You may need to hold back more than 25%, 30% may be safer if you are also taking state taxes into consideration.

 

[abezon]

I keep forgetting about those state taxes! Washington doesn't have them.

 

[FlyingRon]

You may need to hold back more than 25%, 30% may be safer if you are also taking state taxes into consideration.

Don't forget that you also owe self employment tax on the amount as well. Don't forget to keep track of all your expenses. Reasonable and customary expenses can be taken off the top: subscription to magazines, that new computer, web hosting fees, etc... If they file a 1099 it will be for every dollar they give you (even if some of it was reimbursement for stuff you bought) so make sure you keep track of what you spent.

 

[FlyingRon]

Oh, and you should really be making estimated tax payments as well, but they'll let you slide on the first year (and any year you made at least 110% of the previous years payments).