Two ways you can be paid

If you are an employee, the employer takes taxes out before they pay you, and you get a W-2 in January. Your check is smaller, but the tax is already handled.

If you are an independent contractor, you are paid the whole amount and nothing is taken out. That feels better on payday and it is the part that surprises people in April. Most day labor is paid this way.

The employer decides which one they are treating you as, and they should tell you. Ask when you agree on the pay so you are not guessing.

Set money aside as you go

The simplest rule that works: put a quarter of every payment somewhere you will not spend it. A separate account is best, but an envelope works too.

If you make good money for a full year, a third is safer than a quarter. Nobody has ever been upset in April about having set aside too much.

The 600 dollar rule and the 1099

If one employer pays you 600 dollars or more in a year as a contractor, they are supposed to send you a 1099 in January and send a copy to the IRS.

Under 600 dollars, no form comes. That does not make it untaxed. The income still counts, which is why keeping your own record matters more than waiting for paperwork.

What a W-9 is, and when to hand one over

A W-9 is the form where you give an employer your name, your address, and your Social Security number or your EIN, so they can send you that 1099. It is normal and it is not a trap.

The timing is what keeps you safe. You fill one out after you are hired, on their form. Never send your Social Security number in a chat message, and never give it to anyone who is still deciding whether to hire you.

Self employment tax, in plain words

When you are paid as a contractor, you owe both halves of Social Security and Medicare instead of just the half a job takes out. That comes to 15.3 percent, and it sits on top of regular income tax.

That is the real reason a quarter of every payment is the number people land on. It is not one tax, it is two.

Paying during the year instead of all at once

If you expect to owe a real amount, the IRS wants some of it during the year rather than in one bill. Those are called quarterly estimated payments, and they are due in April, June, September, and the following January.

You can pay them online in a few minutes. Skipping them does not make the tax go away, it just adds a penalty to it.

Things that lower what you owe

When you are a contractor, the money you spend to do the work can come off the income you are taxed on. Keep the receipts, because a deduction you cannot show is a deduction you cannot take.

• Boots, gloves, and safety gear you bought yourself.
• Hand tools and the batteries and blades that go with them.
• Miles you drove between job sites, written down with the date and the distance.
• Your phone, for the share of it you use for work.

Keep a record that takes ten seconds

After every job, write down five things. The date, who paid you, the hours, the amount, and how it was paid. A note on your phone is enough.

Do this all year and your taxes take an hour instead of a weekend. It is also the same record that protects you if an employer ever disputes what you were paid.

Getting help for free

There is free tax help for people with lower incomes, in person, in most cities. Search for VITA tax help plus your city, or call 211, and you will find a real person who does this for a living.

Bring your record of what you were paid, any 1099s that came, and your receipts. That is most of the work done before you sit down.