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  1. #1
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    Good article re: contractors and payroll taxes

    I'm sure if you're a contractor you're already aware of much (if not all) of this. My company uses a fair amount of IT contractors but I never realized the tax benefit of doing so.

    Also wasn't aware of the Fed Ex case. Sounds like the IRS is ready to crack down.

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    Re: Good article re: contractors and payroll taxes

    That article is kinda BS, though. Sure the contractor is paying more in taxes, but they are also receiving more in compensation to make up for it. If you're knocking down 80k as a contractor with no benefits, it's not a significant difference in lifestyle than if you're making 50k with good benefits. You're just responsible for paying your own income taxes, and your own health care, and your own social security, your own retirement etc.

    The "tax gap" is due to the independent contractors not doing their taxes right. I think a lot of companies hire IT staff as contractors because they need support, but don't want to support a large standing IT force for stuff they may not need in the future.



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    Re: Good article re: contractors and payroll taxes

    I used to be a Sub but switched to working for contractor because it just didn't pay me enough.

    You have to carry so many insurance policies, pay your own health care and so on. Its just not worth it unless you work your arse off and don't mind working 80 hour weeks. A guy almost needs to assemble a crew to work for him in order to make any money and then you bring more equation as you may need to get the benefits, health care and much more.



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    Re: Good article re: contractors and payroll taxes

    Quote Originally Posted by jDub View Post
    I'm sure if you're a contractor you're already aware of much (if not all) of this. My company uses a fair amount of IT contractors but I never realized the tax benefit of doing so.

    Also wasn't aware of the Fed Ex case. Sounds like the IRS is ready to crack down.

    Are you paying your boss's taxes? - MSN Money
    The EDD (State Tax Board in CA) is really cracking down on this also. The film industry is mainly a contract labor business but the EDD wants to force companies into making them employees, even when they only work for a short amount of time for said company. Some people only work for a company for 1 day, and 1 feature which usually lasts only a month will employ about 200 people. It's crazy that they make them do this.


    "If you can't hear me, it's because I'm in parentheses."



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    Re: Good article re: contractors and payroll taxes

    Everything in the article is correct about the benefit to employers. For contractors its only an advantage if the pay is significantly more, because of the paper work and accounting required. I would not put my money on Fed Ex, when the IRS wants money they don't lose.



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