Working at a Job That Doesn't Take Out Taxes

There are several different careers where your employer may not take taxes out of your paychecks. This occurs most often when you work as a consultant, contract employee or are otherwise considered self-employed. Just because your employer or client doesn't take out taxes doesn't mean you've escaped paying them. When you work at a job that doesn't take out taxes, you are wholly responsible for making your own tax payments.

Self-Employment Tax

Working as a consultant or on a project basis where your employer does not take out taxes more than likely qualifies you as self-employed by the government. Being considered self-employed for tax purposes means that you have to pay a self-employment tax. This tax increases the percentage of your income that the government can claim in taxes, often significantly.

For instance, if you're a regular full-time employee, your Social Security tax rate may be 6.2 percent. The Social Security tax rate for those who are self-employed is the full 12.4 percent. The additional percentage points are imposed to cover the taxes ordinarily paid by your employer, including Social Security and Medicare. Check the Internal Revenue Service's Self Employment Tax page to see if you meet the requirements for self-employment.

Quarterly Taxes

When an employer takes taxes out of your paychecks, these amounts are accumulated and paid to state and federal tax agencies each quarter. You are required to take over this responsibility starting the first quarter that you're considered self-employed. Tax agencies allow you to file as your own employer and pay estimated taxes at three-month intervals throughout the year. There are deadlines for each submission and late fees if you fail to pay your taxes on time – about one dollar per day.

If this is your first year paying quarterly taxes, estimate your income for the quarter and pay taxes on that amount. If you pay less than 90 percent of your tax due for the year, you may incur an underpayment penalty based on the amount of tax not paid throughout the year – approximately 10.9 percent of your outstanding tax liability.

End of Year Taxes

You may elect to file your taxes only at the end of the year even if your job hasn't taken out taxes from your paychecks. If you choose this option, keep in mind that the amount of your tax payments may be significant because they will be based on all of the money that you've made throughout the tax year plus any penalties that the IRS and your state tax agency may impose for not paying quarterly taxes. If you've received income throughout the year from several different jobs, you may want to consult a tax professional to make sure you are paying the correct amount for your tax bracket and to avoid any penalties.

Itemized Deductions

Itemized deductions are your friend when you have to pay your own taxes. Depending on the amount of your deductions, itemizing your taxes may significantly reduce your tax liability. Certain business-related expenses such as cellphone bills, technology expenses and business trip costs can be deducted from your tax payments.

When you plan to itemize, make sure to keep complete records for your tax accountant or in case of an audit. TurboTax recommends that you keep all of your business-related expense receipts, even if you're not sure it can be deducted. To deduct wear and tear on your car, keep a log of the mileage used for business purposes and gas receipts.