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YPN Backup Withholding
Question about money being withheld
azn romeo 4u

5+ Year Member



 
Msg#: 589 posted 6:19 am on May 26, 2006 (gmt 0)

Today I check my payment history to see that 30% of my paycheck was being kept for taxes. But I'm not very familiar with taxes at all. I just recently started to make a pretty decent amount of money with my websites. I know a few things about taxes, but was hoping for some clarification.

1)what exactly is backup withholding. I did a search but I am not really clear.

2)is the taxes for federal taxes only? it's not being withheld for state.

3) Do I still have to send in quarterly payments to the federal goverment if the taxes are being withheld?

4) does that mean the goverment/state is taking half or more of my paycheck every month? 30% to federal, and then 30% (guessing) to state?

thanks for your help.

 

azn romeo 4u

5+ Year Member



 
Msg#: 589 posted 12:00 am on May 27, 2006 (gmt 0)

anyone can help?

awardmasters

5+ Year Member



 
Msg#: 589 posted 1:10 am on May 27, 2006 (gmt 0)

You need to ask your accountant.

azn romeo 4u

5+ Year Member



 
Msg#: 589 posted 7:18 pm on May 27, 2006 (gmt 0)

don't have an accountant...Just lok for some quick answers. I know some people know those questions.

I wish they taught us (high school) how to do our damn taxes...

awardmasters

5+ Year Member



 
Msg#: 589 posted 8:33 pm on May 27, 2006 (gmt 0)

then get an accountant

azn romeo 4u

5+ Year Member



 
Msg#: 589 posted 12:57 am on May 28, 2006 (gmt 0)

posts like that don't help. I'm 18, where do I find an accountant? How much do they charge? Basically I just need these two questions answered.

2)is the taxes for federal taxes only? it's not being withheld for state.

3) Do I still have to send in quarterly payments to the federal goverment if the taxes are being withheld?

NaturalHigh

5+ Year Member



 
Msg#: 589 posted 8:02 am on May 30, 2006 (gmt 0)

I agree, tax basics should be taught in school.

The short of it is, when you make money as a US citizen, you're required to file a tax return annually (due April 15th) stating how much money you made, and how much money you owe the government. It's up to you to figure out how much you owe in taxes and pay the goverment that amount. Its not all that complicated usually. You can do it yourself with software like Turbotax.

Anyone who pays you more than $500 in a year (Yahoo) has to report your earnings to the IRS. This is why these companies ask you for your SSN.

1)what exactly is backup withholding. I did a search but I am not really clear.

Because you haven't provided Yahoo with enough information for them to report your earnings to the government, or some other special situation where its not clear that you'll be responsible for paying your own taxes, they're required by the IRS to hold a certain percentage of your earnings. 30% in this case is being held. Your actual tax rate is probably way lower than 30% of your gross income, so its in your best interest to give Yahoo the information they need or let them know that you're exempt from backup withholding.

2)is the taxes for federal taxes only? it's not being withheld for state.

Yes, Federal only I believe.

3) Do I still have to send in quarterly payments to the federal goverment if the taxes are being withheld?

No. (er..probably not) But again, you don't want to get stuck with Yahoo doing backup withholding. Resolve that first.

4) does that mean the goverment/state is taking half or more of my paycheck every month? 30% to federal, and then 30% (guessing) to state?

State taxes are typically a lot less than Federal taxes. I have no idea how much you're making, or how much you'll be paying in taxes so its hard to say. Usually 30% of your total earnings will more than cover taxes, so be careful not to get cash happy forget that you're going to owe Uncle Sam some money come next April.

Best of luck.

azn romeo 4u

5+ Year Member



 
Msg#: 589 posted 7:54 pm on May 31, 2006 (gmt 0)

Thank you,

I was looking for a good answer like this! Yea taxes should deinfately be in highschool. It's one of the life skills that we need.

LifeinAsia

WebmasterWorld Administrator lifeinasia us a WebmasterWorld Top Contributor of All Time 5+ Year Member



 
Msg#: 589 posted 8:09 pm on May 31, 2006 (gmt 0)

High school students are being graduated who can't even complete 9th grade math. And you want to try to teach them taxes?!

A nationwide tax preparation firm offers a 12-week course that anyone can take. After you finish, they'll probably give you a job offer as well. (Seriously.)

What NaturalHigh posted is pretty much correct. Just a few more comments-
#1- You probably never completed and gave Yahoo the tax form they asked for. As a result, they are required to withhold taxes from your payment.

#2- Not being withheld for state- every state has different rates (some don't have any income taxes).

#3- It depends on your tax situation. If you don't want to hire an accountant, then you'll need to wade through all the IRS pamphlets and figure it out for yourself based on your situation. You should look into making quarterly payments to your state as well.

#4- Once you send the tax form back to Yahoo, they will stop taking out the 30%. You can specify a different amount and/or make your own quarterly payments and/or withhold nothing and hope that you won't owe too much come April 15th.

ember

WebmasterWorld Senior Member 5+ Year Member



 
Msg#: 589 posted 3:10 am on Jun 1, 2006 (gmt 0)

Taxes are way too complex to be taught in high school.

Yahoo should not be withholding any taxes because you are not an employee of Yahoo's. They may think you owe back taxes somehow, or yes, owe them a form. Yahoo should be paying you what you earned, and then it is up to you to report the income to the IRS and pay taxes on it.

Accountants can charge as little as $50 a month to file taxes for you or around $200 a month do that and financials. You can often set up an appointment with them at no charge just to see where you stand. Just don't mess around with taxes. The government takes them very seriously.

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