What can be done if an employer will not withhold income taxes,
social security, and Medicare from my pay?
Generally, if an employer does not withhold income taxes, social security,
and Medicare from your pay, you are being treated as an independent contractor
(self-employed person). If you believe an employee relationship exists and
you cannot resolve this matter with your employer, you should submit a Form SS-8 (PDF), Determination of Employee Work Status
for Purposes of Federal Employment Taxes and Income Tax Withholding.
The factors used to determine if an employer-employee relationship exists
are covered in Chapter 2 of Publication 15-A (PDF), Employer's
Supplemental Tax Guide.
If your status as an employee is not at issue, it may be that you are in
a category of employment whose earnings are not defined as wages under U.S.
federal tax and social security law. Find out from your employer the reason
that social security and Medicare taxes and income taxes are not being withheld
from your pay. If you have further questions, contact the IRS at 800-829-1040
or visit an IRS walk-in office for assistance.
I am self-employed. How do I report my income and how do I pay Medicare
and social security taxes?
You are a sole proprietor if you are the sole owner of a business that
is not a corporation. Report your income and expenses from your sole proprietorship
on Form 1040, Schedule C (PDF), Profit or
Loss from Business (Sole Proprietorship), or on Form 1040, Schedule C-EZ (PDF), Net Profit from Business.
If the total of your net earnings from self-employment from all businesses
is $400 or more, you must pay into the Social Security and Medicare systems
by filing Form 1040, Schedule SE (PDF), Self-Employment
Tax. Self-Employment tax consists of the Old-Age, Survivors, and Disability
Insurance (social security) and the Hospital Insurance (Medicare) taxes. For
more information refer to chapter 1 of Publication 334, Tax
Guide for Small Business.
The Federal tax system is based on a pay-as-you-go plan. Tax is generally
withheld from employees wages or salary before they get it. However, tax is
generally not withheld from self-employment income. Thus, you may be required
to make estimated tax payments. Publication 505, Tax Withholding and
Estimated Tax, provides information on making estimated tax payments.
I received a Form 1099-MISC with an amount in box 7, (nonemployee
compensation). What forms and schedules should be used to report income earned
as an independent contractor?
Independent contractors report their income on Form 1040, Schedule C (PDF), Profit or Loss from Business (Sole Proprietorship),
or you may qualify to use Form 1040, Schedule C-EZ (PDF), Net
Profit from Business (Sole Proprietorship). You should also be aware
of Form 1040, Schedule SE (PDF), Self-Employment
Tax, which must be filed if net earnings from self-employment are $400
or more. This form is used to figure your social security and Medicare tax
which is based on your net self-employment income. You may also need to file Form 2210 (PDF), Underpayment of Estimated Tax by Individuals,
Estates & Trusts, if you do not make estimated tax payments.
Can an employer take out taxes if a Form W-4 was never filed?
Yes, the employer is required to withhold income taxes. Chapter 9 of Publication 15, Circular E, Employer's Tax Guide, states that if an employee
does not give you a completed Form W-4 (PDF), Employee's
Withholding Allowance Certificate, withhold tax as if he or she is single,
with no withholding allowances.
The employer is also required to withhold social security and Medicare
If an employee claims more than 10 exemptions on their Form W-4,
does the employer have to report this to the IRS?
No, this requirement has been eliminated. In the past, employers had to
routinely send the IRS any Form W-4 (PDF), Employee's
Withholding Allowance Certificate, claiming more than 10 allowances or
claiming complete exemption from withholding if $200 or more in weekly wages
was expected. However, Forms W-4 are still subject to review. Employers may
be directed (in a written notice or in future published guidance) to send
certain Forms W-4 to the IRS. The IRS also will be reviewing employee withholding
compliance and you may be required to withhold income tax at a higher rate
if notified to do so by the IRS.
We are about to hire employees and need to know how much tax to
take out and where to send this money?
You will need to secure a completed Form W-4 (PDF), Employee's
Withholding Allowance Certificate, from each employee. You will need Publication 15, Circular E, Employer's Tax Guide, and Publication 15-A (PDF), Employer's Supplemental Tax Guide, to determine
the amount of withholding and for directions on depositing the withholding
amounts and other employment taxes.
Generally, employers will quarterly file Form 941 (PDF), Employer's Quarterly Federal Tax Return, and annually
file Form 940 (PDF), Employer's Annual Federal
Unemployment Tax Return (FUTA), and Form W-2 (PDF), Wage
and Tax Statement, with Form W-3 (PDF), Transmittal
of Income and Tax Statements.
We hired a nanny to look after our baby while we work. How do we
pay her social security taxes and properly report her income?
A nanny is considered a household employee. A household employer only has
to pay social security and Medicare tax only for the employee(s) that receive
cash wages that exceed the threshold amount for the year. If the amount paid
is less than the threshold, no social security or Medicare tax is owed. If
social security and Medicare tax must be paid, you will need to file Form 1040, Schedule H (PDF), Household Employment Taxes.
You must withhold the employee's portion of the social security and Medicare
unless the employer chooses to pay both the employee's share and the employer's
The taxes are 15.3% of cash wages. Your share is 7.65% and the employee's
share is 7.65%. You may also be responsible for paying federal unemployment
taxes. For directions on household employees, refer to Publication 926, Household
Employer's Tax Guide.
Under my visa as a temporary nonresident alien, I'm not subject
to social security and Medicare withholding. My employer withheld the taxes
from my pay. What should I do to get a refund of my social security and Medicare?
If social security tax and Medicare were withheld in error from pay received
which was not subject to the taxes, you must first contact the employer who
withheld the taxes for reimbursement. If you are unable to get a refund from
the employer, file a claim for refund with the Internal Revenue Service on Form 843 (PDF), Claim for Refund and Request for Abatement.
You must attach the following to your claim:
- a copy of your Form W-2 (PDF), Wage and Tax
Statement, to prove the amount of tax withheld;
- Form I-797, INS Approval Notice, is needed if you have changed
your status from F-1 or J-1 to another status prior to filing the claim;
- if your visa status changed during the tax year you should attach copies
of the pay stubs that cover the period of exemption from social security taxes;
- a copy of INS Form I-94, Arrival/Departure Record, if you are still in
the United States;
- a copy of your valid entry visa;
- Form 8316, Information
Regarding Request for Refund of Social Security Tax, or a signed statement
stating that you have requested a refund from the employer and have not been
able to obtain one; and
- a copy of Form 1040NR (PDF), US Nonresident
Alien Income Tax Return (or Form 1040NR-EZ (PDF)),
for tax the year in question. Processing of your claim may be delayed if you
submit it less than six weeks after you filed Form 1040NR or 1040NR-EZ.
In addition to the documentation listed above foreign student visa holders
should also attach the following:
- a copy of Form I-20, Certificate of Eligibility, endorsed by your student
advisor and stamped by the Bureau of Citizenship and Immigration Services;
- a copy of the Employment Authorization Document of your Optional Practical
Training (e.g., Form I-766, I-538 or 688B).
- if you are an exchange visitor, attach a copy of Form IAP-66 or DS-2019
to your claim.
File the claim, with attachments, with the IRS where the employer's returns
were filed. If you do not know where the employer's returns were filed, send
your claim to the Internal Revenue Service Center, Philadelphia, PA 19255.
For more information, refer to Chapter 8 of Publication 519, U.S.
Tax Guide for Aliens .
Are nonresident alien students, with F-1 or J-1 visas and employed
by a U.S. company during the summer, required to have federal income taxes
withheld from their paychecks?
The following discussion generally applies only to nonresident aliens.
Wages and other compensation paid to a nonresident alien for services performed
as an employee are usually subject to graduated withholding at the same rates
as resident aliens and U.S. citizens. Therefore, your compensation, unless
it is specifically excluded from the term "wages" by law, or is exempt from
tax by treaty, is subject to graduated withholding. Nonresident aliens must
follow modified instructions when completing Form W-4 (PDF). Please refer to Chapter 8 of Publication 519, U.S. Tax
Guide for Aliens, for directions on completing Form W-4 (PDF), Employee's Withholding Allowance Certificate.
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