I'm not sure if my boss is being sketchy and if i'm setting myself up for a pain in the butt.

Here is some helpful information.

As a self employed person, you are responsible for paying both sides of the Social Security (FICA) and Medicare trust fund payments (in effect, you are your own employer). If you were working for wages, half of this would be covered by the employer, and half would be you, and it would be automatically withheld from your wages, along with your income tax withholding. Let's run the numbers: If all $16,273 of your income was earnings from self employment, your self employment tax (the FICA and Medicare part) would be about $2,300 for the year. Assuming you qualified to claim your own exemption, used filing status single, and had full-year health insurance coverage, your income tax liability would be about: $16,273 - $1,150 (1/2 of your SE tax) - $3,950 (personal exemption) - $6,200 (standard deduction for Single) = taxable income of $4,973 Taxable income of $4,973 = $498 income tax. Your total tax = $498 + 2,300 = $2,798. So, for 2014, you had some ordinary and necessary business expenses which reduced your self employment earnings to something less than $16,273. This also reduces your SE tax and income tax. Or you qualified for a credit (reducing your $498 income tax) or other deduction. It's a pay-as-you-earn system: for wage earners it's a matter of adjusting your withholding correctly so you don't owe a balance due when you file. For self employed persons, this process is called Estimated Tax payments, which are generally paid every quarter. You total up your income and expenses, and use a worksheet to calculate your combined income tax and self employment tax for that quarter. You cut a check and mail it in. It sits on your IRS tax account, and it waits for you to file your return. If you have accurately estimated your tax liability during the year, you don't owe a balance due when you file. Being self employed requires discipline: when the money comes in, you set aside what you need to cover your estimated tax. You can claim ordinary and necessary expenses to offset your income.

/r/personalfinance Thread