For US-based freelancers: W-4 Tax Form
Thread poster: sokolniki

sokolniki  Identity Verified
United States
Local time: 10:44
English to Russian
+ ...
May 11, 2009

A new agency is hiring me for a 6-weeks-long tutoring project and requires to file W-4 Employee’s Withholding Allowance Certificate tax form, among other paperwork.

In all those years as a freelancer in the USA this is the first time this kind of tax form is required. Normally W-9 is sufficient and at the end of the fiscal year all agencies send me a copy of 1099 (for income over $600) to file my own Income Tax Return as self-employed. I pay my taxes in advance on a quarterly basis.

If you ever had any experience with US agencies requiring this W-4 tax form for contractors, I will greatly appreciate your advice.

Thanks in advance.


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Kaiya J. Diannen  Identity Verified
Australia
Member (2008)
German to English
W-4 form is for *employees* May 11, 2009

If they are asking you to fill out a W-4 form, this means they are officially putting you on the payroll as an "employee".

I have no idea if that's appropriate in this situation or whether you agreed to this status, but if you intend to take on this position as a "freelancer", you should definitely clarify this with them.

http://www.hrdocs.com/Posters/hrproducts/W4.asp
http://jobsearch.about.com/od/salary/qt/W4form.htm


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Natalia Potashnik  Identity Verified
United States
Local time: 09:44
Member (2004)
English to Russian
+ ...
the agency will withhold taxes for you May 11, 2009

There is nothing wrong with it. It looks like the agency hires you as a contractor. They will withhold taxes. After the end of the financial year you will receive a standard form from the agency with the totals of your salary and taxes you paid. Attach this form to your tax return.

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James McVay  Identity Verified
United States
Local time: 11:44
Russian to English
+ ...
I would explain the facts of life to them May 11, 2009

Is this "new agency" new to the business, or is it new to you?

I suspect the company is confused about what constitutes an employee versus a contractor. Normally, companies ask employees to fill out a W-4, and they withhold Medicare and Social Security in addition to federal and state income taxes, health insurance, 401k contributions, etc. I'll bet they don't intend to do all that for you. As I'm sure you know, contractors normally complete a W-9 and take care of all that extra stuff themselves. Look at this site for an explanation:

http://taxes.about.com/od/taxglossary/qt/W9.htm

You could go ahead and let them do it, if they are willing. Having been both an employee and a contractor (i.e. a freelancer), I can say that the bookkeeping is simpler for employees. But if you have differentiate between income that somebody else has withheld taxes from and income on which you yourself are paying taxes quarterly, it might get a tad bit complicated.


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RieM  Identity Verified
United States
Local time: 11:44
English to Japanese
+ ...
shouldn't be a problem May 11, 2009

I have had both W-2s and 1099s received from different clients for several years. W-4 indicates what percent of your earning you want the hiring company to withhold as tax money, and with this arrangement you receive W-2 instead 1099 form early next year.

As Natalia says, the agency wants to hire you as a contractor for this particular job. The good news is you will be probably on their regular payroll during the "employment" period, but I may not be 100 % sure about that. Check with the client!

It has nothing to do with health insurance/401k stuff, which are determined based on other employment parameters (such as fulltime/part time).

If you are still concerned though, I recommend consulting a tax specialist.

Regards,
Rie


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sokolniki  Identity Verified
United States
Local time: 10:44
English to Russian
+ ...
TOPIC STARTER
Thanks a lot, everybody! May 12, 2009

So good to get advice from people that know better than you do.. I would prefer the old routine with W-9 (an old dog with the new tricks?) and have been trying to convince the Account Manager to make an exception for me. Thanks again!

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For US-based freelancers: W-4 Tax Form

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