Tax question

PJAdams · #1 (**permalink**) 10-31-2008, 03:36 PM

Someone please tell me what we need to do.
I'm married, 2 kids. Husband working, I'm not working.
We usually filed the short form.
This year, husband got a great job - our income has quadrupled.
How do we prevent getting hit with a huge tax bill?

He is working on a contractor basis with the company, great salary, plus Per Diem and mileage.

Do we need to form a LLC, or what? We always got a refund before, now I'm afraid we will get hit with a huge tax bill....we realize we will need to itemize deductions but what else needs to be done??

thanks

pants711 · #2 (**permalink**) 11-01-2008, 04:51 AM

Quote:

Originally Posted by PJAdams

Someone please tell me what we need to do.
I'm married, 2 kids. Husband working, I'm not working.
We usually filed the short form.
This year, husband got a great job - our income has quadrupled.
How do we prevent getting hit with a huge tax bill?

He is working on a contractor basis with the company, great salary, plus Per Diem and mileage.

Do we need to form a LLC, or what? We always got a refund before, now I'm afraid we will get hit with a huge tax bill....we realize we will need to itemize deductions but what else needs to be done??

thanks

Is your husband working as an independent contractor?

I did that for 2 years, picking up jobs from several different companies and I was required to file taxes quarterly. It was a lot more paperwork and I ended up paying taxes. I would go to the FAQ section of the IRS site and research.

PJAdams · #3 (**permalink**) 11-03-2008, 11:19 AM

Yes, he's working as an independent contractor. So I'm hoping to head off a huge tax bill!!!!

pants711 · #4 (**permalink**) 11-03-2008, 06:04 PM

Quote:

Originally Posted by PJAdams

Yes, he's working as an independent contractor. So I'm hoping to head off a huge tax bill!!!!

Well, if your husband is an independent contractor, he is required to file his own tax forms and pay estimated taxes, 4 times a year. If he hasn't done that this year, he will be hit with penalties. I hope you guys have some money set aside in savings to pay the taxes and/or penalties. Check out these sites for more information:

Working as an Independent Contractor FAQ

Self-Employed Individuals Tax Center

Hope it works out for you.

Sponsors