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    Tax question - Contractor

    I have an offer to be an independent contractor, and I'm having a difficult time figuring out what the impact would be to me as far as what I would need to withhold. Any help? It'd be for 6 months, to-hire. I'm married as well, to further complicate matters..



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    Re: Tax question - Contractor

    Since your employer wont be paying half of the social security\medicare tax you get to pay double for that.



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    Re: Tax question - Contractor

    Yeah, 15.3% for medicare and SS doh.



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    Re: Tax question - Contractor

    However, you will get to deduct one half of that (employer's share) on your self employment income.

    There is no formal way to withhold on self employment. Rather you should just budget like not all of that money will be yours to keep.



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    Re: Tax question - Contractor

    Withhold some and save a lot. No point in paying Uncle Sam until you have to. Watch out for potential penalties for underwithholding...


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    Re: Tax question - Contractor

    Quote Originally Posted by d4nim4l View Post
    However, you will get to deduct one half of that (employer's share) on your self employment income.

    There is no formal way to withhold on self employment. Rather you should just budget like not all of that money will be yours to keep.
    This will make the 2010 tax return "interesting"

    Estimate your taxes based upon 15.3% SE taxes + whatever you would normally pay for your tax bracket. Do the same for state (assuming you're in a state with income taxes)

    Estimated Taxes

    Don't forget to track everything that you do that is an expense. You'll likely file a schedule C next spring and can take business expenses off of the contract income if they are expended in the course of that work.

    http://www.irs.gov/pub/irs-pdf/i1040sc.pdf

    Also track your mileage. Publication 463 (2009), Travel, Entertainment, Gift, and Car Expenses - although commuting mileage to your primary place of business may not be covered - see your tax guy.

    Also track home office expenses - you might be able to deduct a portion of your internet connection (assuming that you log in or check e-mail from home), your cell phone (if that is your primary business line - that doesn't work for a single land-line at a home although a second land line can be defined as a business expense), and other expenses that you might incur in operating your business.


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    Re: Tax question - Contractor

    Thanks for expanding on that tyke. Kind of hard to do on a phone.



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