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Tax debt help for contractors

Crews, 1099s and payroll. Sort it out.

General contractor in a hard hat reviewing plans on a tailgate at a job site
Updated October 8, 20264 sourcesFact checked

Self employment tax calculator

Your profit in. Your quarterly number out.

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Penalty calculator

See what late filing and late paying add.

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Why it matters

Contractors juggle jobs, crews and payments. When cash is tight, payroll deposits can slip.

That is risky. Withheld payroll tax belongs to your workers, and the IRS can come after the owner for it.

If you are behind on 941s or your own taxes, a tax pro can step in before it gets worse.

  • Employers withhold and pay taxes on employees. They generally do not on independent contractors. Calling a worker the wrong one can leave you owing.
  • Taxes you withhold from workers are trust fund taxes. You hold their money until you deposit it.
  • The Trust Fund Recovery Penalty can be charged to any responsible person who willfully does not pay them. No bad intent is needed.
  • A responsible person can be an owner, officer, partner or anyone with power over which bills get paid.
  • Late payroll deposits cost 2% (1 to 5 days late), 5% (6 to 15 days) or 10% (over 15 days). It rises to 15% after an IRS demand.
  • Employers file Form 941 every quarter for withheld income tax, Social Security and Medicare.

What a tax pro may ask you

Have these ready. Clear answers help a tax firm see what fits you.

  • If you have W-2 workers, 1099 workers or both
  • Which Form 941 quarters are late or unpaid
  • Which tax years you have not filed
  • The notice code in the top right corner of any IRS letter

Common questions

Can the IRS make me pay my company's payroll tax?

Yes, through the Trust Fund Recovery Penalty, if you were responsible and willfully did not pay. No bad intent is needed.

What if I paid my crew as 1099s?

If they were really employees, you may owe payroll tax you did not withhold. A tax pro can review it.

Can a tax pro stop IRS collection?

They can ask the IRS for a payment plan, a hold, penalty relief or an offer, based on your facts. Results depend on your situation. Not every case qualifies.

Ways to get help

Offer in compromise: Ask the IRS to take less than you owe. Hard to get.Payment plan: Pay what you owe a little each month.Not collectible: The IRS pauses collection while money is too tight.What happens if I owe the IRS and can't pay?What happens if I owe back taxes?I owe the IRS money. What do I do first?

Results depend on your situation. Not every case qualifies.

Sources

  1. IRS: Independent contractor or employee?
  2. IRS: Employment taxes and the Trust Fund Recovery Penalty
  3. IRS: Failure to deposit penalty
  4. IRS: About Form 941
Other jobs

We help a lot of jobs

Self employed graphic designer at a home studio desk with a sketch tabletSelf employedNo withholding means the tax bill comes all at once.Gig worker in a hoodie with a delivery bag on a bike at a city cornerGig workersApp pay is taxable, 1099 or not.Rideshare driver in his 40s leaning on his clean sedan at a curb, phone in handRideshare driversMiles matter when the 1099 comes.Delivery driver carrying a box up porch steps, brown jacket, smilingDelivery driversDelivery pay, no withholding.Owner operator truck driver standing by the cab of his semi at a truck stop at dawnOwner operatorsYour own truck, your own Form 2290.

Run the numbers with our free tax tools, like the penalty and payment plan math.

See your options

A few questions. A tax pro calls you back.

Free tools: penalty calculator, 10 year clock, IRS offer data

Free to use. Not the IRS or any government agency. Results depend on your situation. Not every case qualifies.