My husband is a subcontractor driver. IRS has just brought to our attention that in 2013 after only working for the company for two months his gross pay was $1955.00 however this is not what he brought home, as the company deduct insurance, fuel, and whole bunch of other stuff that doesn't relate to tax, ss, or Medicaid. My question is wouldn't his gross be what he physically brings home on a check? =====>>No the amount what he physically brings home is so called NET HOME PAY or take home pay calculated by taking your spouse’s monthly gross income,I mean his total monthly income before any subtractions, in general but weekly or semi weekly also, , and subtracting federal income tax, Social Security and Medicare taxes, any state or local income taxes, monthly health and dental insurance premiums, 401(k) contribution and contributions to a flexible spending account. You said that your spouse is a sub contractor, then, his ER will not have to worry about withholding any of his income for taxes. His ER only has to withhold tax money for your spouse. When dealing with subcontractors, his ER simply pays him the full amount he earns and it is up to him to withhold money for taxes. This makes the process of doing payroll much easier and his ER will not have to send in tax payments to the IRS for your spouse; as a 1099 sub contractor, your spouse, although self-employed subcontractor does not have to have taxes taken out of his paychecks, has to pay taxes regularly. Self-employed individuals must make quarterly tax payments. The amount of the tax payments is based on how much your spouse, the subcontractor, estimates he will have to pay in taxes for the year. He simply divides his total amount of estimated tax by four and sends his payments in at the appropriate tax payment deadlines. If your spouse is filing as a sole proprietor and/or a self-employed individual, he generally has to make estimated tax payments if he expects to owe tax of $1K or more (after credits/ tax withheld)when he files his return.He does not have to pay estimated tax for the current year if he had no tax liability for the prior year; he was a U.S. citizen or resident for the whole year; his prior tax year covered a 12 month period.I mean actually his ER did not have to withhold taxes form your spouse’s paycheck as your spouse is NOT an EE but a 1099 semi contractor. Your spouse may need to file for refun; your spouse can tell them to re-issue his check without anything withheld next time. Then they will issue him a new 1099.
I guess Evidently his ER, an employer , is treating him as an employee. An employee gets W2 and an independent / sub contractor gets 1099-misc. On W2 the ER must withhold Social Security and Medicare taxes.As social security or Medicare taxes were withheld in error from pay that is not subject to these taxes, he needs to contact the employer who withheld the taxes for a refund.If he is unable to get a full refund of the amount from his ER , then he needs to file a claim for refund with the IRS on Form 843.
I am only asking as they are now saying he owes $7,000 taxes on 19,000==========>>As mentioned above; your spouse is in double taxation situation; he needs to ask his ER to correct its error and refund the overpayment. He cannot claim the overpayment on his income tax return and receive a refund from the IRS/ his state on return next year.