quick tax question

[kooroo]

Hey folks,

2 people making identical amounts of money in 2009, one is 1099 and the other is standard w-2. Both take identical deductions for things like charitable donations, mortgage interest, etc and no oddball deductions like mileage or home-office etc.

The 1099 is liable for ~7% more to cover fica and that's it no? I'm told there was new legislation that raises taxes for freelancers but this is news to me.

 

[BrunoPuntzJones]

Assuming the number for the 1099 is profit and doesn't have anything to deduct expense wise, yes.

The 1099'ers are responsible for the employee portion of social security and medicare, as well as the employers portion.

This isn't anything new. There is some stuff regarding those getting paid by 1099 to have stuff withheld, but not up to date on it.

 

[spidey07]

Bruno's got it. Agreed.

 

[JS80]

Hey folks,

2 people making identical amounts of money in 2009, one is 1099 and the other is standard w-2. Both take identical deductions for things like charitable donations, mortgage interest, etc and no oddball deductions like mileage or home-office etc.

The 1099 is liable for ~7% more to cover fica and that's it no? I'm told there was new legislation that raises taxes for freelancers but this is news to me.

More like 15%.

 

[EagleKeeper]

Hey folks,

2 people making identical amounts of money in 2009, one is 1099 and the other is standard w-2. Both take identical deductions for things like charitable donations, mortgage interest, etc and no oddball deductions like mileage or home-office etc.

The 1099 is liable for ~7% more to cover fica and that's it no? I'm told there was new legislation that raises taxes for freelancers but this is news to me.

More like 15%.

The 1099 is expected to cough up the extra 7.5% that the employer pays.
This makes the FICA amount a total of 15%.

However, the W2 person has his share of the FICA (7.5%) withheld by the employer.

The key word between the two different statemets that are quoted is the word MORE

The 1099 must pay 7.5% more than the W2 person. The overall FICA amount is 15% which the 1099 person sees as being paid by check where the W2 sees their share being paid via forced deduction - employer's share is never seen by the employe.

 

[spidey07]

The 1099 is expected to cough up the extra 7.5% that the employer pays.
This makes the FICA amount a total of 15%.

However, the W2 person has his share of the FICA (7.5%) withheld by the employer.

The key word between the two different statemets that are quoted is the word MORE

The 1099 must pay 7.5% more than the W2 person. The overall FICA amount is 15% which the 1099 person sees as being paid by check where the W2 sees their share being paid via forced deduction - employer's share is never seen by the employe.

The take away here is fuck FICA. When I do 1099 work I raise my rate about 40%.

 

[EagleKeeper]

The take away here is fuck FICA. When I do 1099 work I raise my rate about 40%.

Also, track and itemize ALL potential expenses (direct and indirect)