Do you own a business? Are you an independent contractor? Do you do freelance work on the side? If you answered yes to any of these questions you are faced with a unique opportunity, the ability to pay taxes or not.
For the mainstream employee who works for a company, money is removed from his or her paycheck each month for taxes. This payment goes to the government, and then he or she can file to either pay more or receive a return. The process is basically automated.
If you are the business owner or if you do work on the side, then the money that comes your way is a payment and not a paycheck. The difference is usually that taxes are not removed before you receive the money.
While at first this may seem like a blessing, the reality is that you still do owe the taxes. Not only do you owe income taxes, but also Social Security. If you don’t pay the government their money, you could wind up with a hefty penalty or worse… in jail.
Unless you make less than $400 a year, you need to file taxes. While it may be tempting to not, you can make a large headache for yourself if you don’t. Paying taxes is a legal obligation, and it makes the income you earn valid. If you want a car or home loan, you will need to provide an honest source of income. Additionally, if you are disabled, you will want to have that Social Security check coming your way.
If you don’t pay your Social Security taxes, which are figured into your self-employment tax, you won’t be eligible for the benefits either. This means no retirement, death or disability benefits. Not only will you be breaking the law, you could be hurting your chances to gain from a valuable government resource.
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