Contractor Question....

[dxkj]

How much more are they taxed compared to a normal full time position in a company? For this example lets assume Illinois.

I make $24.50 an hour at my current job and bring home about 80% of that, compared to that how much would a contractor making the same amount be taxed?

 

[jondercik]

same amount.

 

[Jzero]

The amount of the tax you pay will be the same, however because you are not loaning your Uncle Sam any money throughout the year, you will not get a refund in April and your perception may be that you are paying a lot more.

But it's better this way. Just remember to remit payment on a quarterly basis.

 

[AnyMal]

Your FICA will double to 15% from 7.5% However, bein a contractor you may be able to write off some expenses, like tools, mileage and such.

 

[dxkj]

Originally posted by: AnyMal
Your FICA will double to 15% from 7.5% However, bein a contractor you may be able to write off some expenses, like tools, mileage and such.

Wont be using any tools, and its a 2 mile drive :-/


So far it looks like 7.5% more tax total

 

[AnyMal]

Originally posted by: Jzero
The amount of the tax you pay will be the same, however because you are not loaning your Uncle Sam any money throughout the year, you will not get a refund in April and your perception may be that you are paying a lot more.

But it's better this way. Just remember to remit payment on a quarterly basis.

IIRC, if you work for 1099 you can wait and file with W-2's and there will be no penalty. I may be wrong though, it's been few years since I've done it.

 

[Jzero]

Originally posted by: AnyMal
IIRC, if you work for 1099 you can wait and file with W-2's and there will be no penalty. I may be wrong though, it's been few years since I've done it.

It depends how much you owe. I forget what the limit is, but when I was in college, my one internship had me on 1099, and between that and my student job one year, I earned enough that I was assessed a penalty for not paying quarterly.

So in some cases it won't be a problem, but my accountant recommended that I just pay quarterly to be on the safe side.

 

[TStep]

Our avg employee in construction gets around $20 / hr in his check.

To that the company adds:

---about $8 in benefits

---and burdens (FICA, Unemployment comp, Workman's Comp, gen liability, property liablity, etc) average about 40% overall, so say $8 additional dollars.

Add to that a profit on labor (which is project dependant) and you can see why a company charges upwards of 2x the employees wage.

 

[dxkj]

Originally posted by: TStep
Our avg employee in construction gets around $20 / hr in his check.

To that the company adds:

---about $8 in benefits

---and burdens (FICA, Unemployment comp, Workman's Comp, gen liability, property liablity, etc) average about 40% overall, so say $8 additional dollars.

Add to that a profit on labor (which is project dependant) and you can see why a company charges upwards of 2x the employees wage.

So as a computer contractor do I have to pay for FICA, Unemployment comp, workmans comp, gen libailty, property liabilty etc, ??

 

[EagleKeeper]

Originally posted by: dxkj

Originally posted by: TStep
Our avg employee in construction gets around $20 / hr in his check.

To that the company adds:

---about $8 in benefits

---and burdens (FICA, Unemployment comp, Workman's Comp, gen liability, property liablity, etc) average about 40% overall, so say $8 additional dollars.

Add to that a profit on labor (which is project dependant) and you can see why a company charges upwards of 2x the employees wage.

So as a computer contractor do I have to pay for FICA, Unemployment comp, workmans comp, gen libailty, property liabilty etc, ??

You are responsible for your own FICA taxes. Anything else would be based on an agreement with the client as to if you have to maintain liability insurance.

Even though you have more tax FICA responsibility, you ahve the ability to expense of many things.

Dig up the tax thread for plenty of ideas.

 

[DAGTA]

Additional 15.3%. So, if you took home 80% before (20% taxes) you can expect to take home 64.7% (35.3% taxes). Of course, you can get itemized deductions in at the end of the year that will help lower that, but you'll likely still end up paying more in taxes than if you worked for someone else.

 

[rahvin]

Originally posted by: jondercik
same amount.

Why do you reply if you don't have a clue and are just guessing?