Accounting & Bookkeeping & Small Business Forum

Morning all,

I hope you can all help!

I done some freelance work in Aug of last year for a friends firm. Due to lack of funds payment was delayed until February (I was fine with it as they are friends) payment was made in Februaury and I have since become an employee of the company in May I have asked that I would like to pay the money from Feb back to the company and have it paid back to me in my payslip minus all deductions. This is to save me having to calculate the deductions at the end of the year (and also the fear I will spend what I should be deducting ) can someone tell me is it possible and ok to do this? I can't see any reason why not just want to make sure it's ok.

Sounds like you were not an employee at the time of the work and payment, so how could the money be paid back and reported as employee income when you were in fact not an employee? YOu're trying to make things complicated. Just report the freelance payment as self employment income, report the self employment taxes, if any, and report employee income as appropriate. Set aside 30% of your self employment income for taxes at end of year. Any good tax software, some free on the net, can calculate the self employment taxes due for you for your tax return. You're good to go.

Good post, you're making things way too complicated by asking your new employer to take the freelance money back and run it thru the payroll system. Plus, you're running the risk of getting that kind of hanky panky come back to bite you in a payroll tax audit. Good luck!

Hi,
To change the terms of payment now would create problems.To address your issue of not saving the tax money, when you fill out your W4 for your new job (which can be revised anytime), take additional money out for withholdings. For instance Single, 0 deductions plus $5. There is a line you can put the additional $5 on. Go on the IRS website and download the w4 form and you will see what I mean.

Good luck.