Income Exempt From Withholding

• If you work as an independent contractor, you're not technically "employed." You provide a service to clients in exchange for payment. These clients do not withhold federal tax from what they pay you; it's your responsibility to figure out what you probably owe the Internal Revenue Service and make quarterly estimated payments throughout the year. If you don't make estimated payments, or if your payments fall short of what you end up owing, the IRS will probably add interest and penalties. Likewise, you should make estimated payments if you have no source of income from a regular job, but receive money from real estate you rent out or interest from investments. None of these circumstances affect your status as head of household, however.