Unlike full-time employees whose employers withhold taxes from their paycheck, contractors are responsible for setting aside funds and paying federal and state taxes themselves.
Our Tax Withholdings feature is an easy way to save for taxes—however, you must still file taxes according to federal, state, and local laws.
The Tax Withholdings feature is only available to US-based contractors.
Setting Up Tax Withholdings
Before you can set up your Tax Withholdings, you'll need to complete our banking verification process.
Once you've completed the banking verification process, you’ll be able to get started. Just head to Financial Benefits in the left-hand panel, then select Tax Withholdings. From there, click the Set up tax withholdings button in the top right corner.
On the next screen, select your filing status and click Continue:
Next, select your estimated income for the year. You can change the tax rate in the future if the income you're receiving changes:
Finally, select your state of residence and click See my recommended rate:
You can click the - or + to decrease or increase the percentage withheld for taxes and click Edit on each field if you need to update your tax information. To complete your setup, click the Save % of my income for taxes button. If you would like to prevent taxes from being withheld, you can click Don't save for taxes:
Managing Tax Withholdings
Once you've turned on Tax Withholdings, we automatically set aside a proportion of the income you receive into an accessible FDIC-insured account. You can also deposit, withdraw, and pay your federal taxes from your tax withholding account.
Change your Tax Withholdings Amount
To change your withholding rate, navigate to your Tax Withholdings Dashboard and click Update tax profile in the top right-hand corner:
Choose the new percentage you want to set aside for taxes and click Save.
Transferring Tax Withholdings
You can transfer funds out of or into your Tax Withholdings account at any time. To get started, click the Transfer button at the top right:
Next, choose whether you want to transfer funds from your Tax Withholdings to your personal bank account, or send funds from your bank account to your Tax Withholdings account.
Select the account you would like to transfer to or from and enter the amount to transfer. If you do not have a bank account connected, you can click Add bank account to enter your banking information. Click the Transfer $ button to complete the transaction:
Pay Federal Taxes
To pay federal taxes from your Tax Withholdings account, click the Send tax payment button:
You will be prompted to enter the amount you would like to pay. The payment amount will be set aside and paid on the quarterly IRS deadline, usually due on April 18, June 15, and September 15.
If you owe estimated tax payments to your state or locality, you must ensure they are paid. You can withdraw your withholding balance and use it to pay state and local taxes.
In order for Velocity Global Contractor Management to submit a Quarterly Tax Payment to the IRS, you must be enrolled with EFTPS (Electronic Federal Tax Payment System). Enrollment with EFTPS needs to happen only once, is completely free, and enables you to look up a payment on the EFTPS website.
Once enrolled, you will receive a letter from EFTPS in the mail within 2 weeks. This letter will provide an Inquiry PIN that you can use to create an account and log into the EFTPS website to view your payment history.
Federal Tax Payment Terms of Service
I authorize Wingspan Networks, Inc and its partner Track Technologies, Inc. dba “Abound” (4 Embarcadero Ctr, Ste 1400, San Francisco, CA 94111) to enroll me with EFTPS and submit estimated tax payments to the IRS and/or state tax authorities on my behalf. I certify under penalty of perjury that the personal and bank information provided to this service is accurate and my own. I understand that payments submitted through this service to the federal and/or state tax authorities are finalized and cannot be reversed. I acknowledge that the specific use is not recorded on the Centralized Authorization File (CAF). I authorize Abound to receive and/or inspect estimated tax payments and tax information related to Form 1040 and 1040ES for the years 2021-2024 for the purpose of submitting estimated tax payments. My agreement to these terms on today’s date represents my digital signature for the written equivalent of Form 8821 and authorization to file Form 8821 on my behalf with the information herein.
Velocity Global Contractor Management helps you save for taxes, but it is up to you to calculate how much you owe the IRS each quarter with the following form:
Estimated Tax for Individuals (1040-ES) This worksheet helps you calculate exactly what you owe in quarterly taxes.
If you choose not to send your tax payment through Velocity Global Contractor Management, you can also submit your payment using one of the methods below:
Submit an electronic payment to the IRS: EFTPS.gov allows you to pay the IRS electronically.
Mail a check addressed to the United States Treasury: You can write a check to the United States Treasury for the quarterly tax payment and mail it to the nearest IRS mail center.
Turn Off Tax Withholdings
If you'd like to turn off Tax Withholdings completely, navigate to your Tax Withholdings Dashboard and click Turn off in the top right-hand corner:
For questions about Tax Withholdings, please contact our Support Team.