Has anyone done any contract work, either 1099 or W2?

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Originally Posted by Roybatty

Time to engage a local accountant. u need one to make best decision.

Sent from garage

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Agreed, that and someone to do your bookkeeping - if you're worth that kind of cash, the cash is worth that sort of care.

Add that cost to the mix; it shouldn't be exorbitant.

Also I would recommend, as Jeremy does, going the s-corp route.

Flexibility and a bit of insulation from the bed-bugs of prosperity.

i can ask me madre when i see her next and ill let you know

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Originally Posted by Intropy

I guess I should let the Bay Area tech companies that just fell over themselves to hire me know that JohnnyTurbo thinks I don't deserve it. :rolleyes3:

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What do you do?

Very interesting thread. Please keep us updated as you gather information :) Congrats on the new job opportunities!

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Originally Posted by HilbillyHomeboy

I am self employed. I get dry raped in taxes. In that income bracket, you're going to get killed as well. As was mentioned earlier, you get to pay both sides of SS, plus a 15% self employment tax. I also recommend talking to an accountant. You may want to set up an S-corp, or something to that effect to get some tax benefits.

Jeremy

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This!!!

While I'm not self employed my Wife runs our home business and is. Also, the business income still comes in under my name as well.

Taxes are a bitch! Make sure you set plenty aside as you will be paying more as a self employee individual compared to an employee.

I do all of our bookkeeping and reporting but still have our accountant review all of our paperwork at the end of the year to make sure everything is correct.

Congrats on the new opportunities.

-John

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Originally Posted by HilbillyHomeboy

I am self employed. I get dry raped in taxes. In that income bracket, you're going to get killed as well. As was mentioned earlier, you get to pay both sides of SS, plus a 15% self employment tax. I also recommend talking to an accountant. You may want to set up an S-corp, or something to that effect to get some tax benefits.

Jeremy

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Yeah I was afraid of that. This work is going to be in addition to my "real" job, so I just want to make sure I don't bust my ass for nothing. Never even thought about the S-corp, thanks, I'll look into that.

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Originally Posted by futurevr4man

i can ask me madre when i see her next and ill let you know

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Cool, thanks.

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Originally Posted by zelstin

What do you do?

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I'm a systems / OS guy, I know how to interface with developers (both lower-level hardware folks and application / front-end folks) and make things work. Think of it like IT where all the users have Ph.Ds.

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Originally Posted by HilbillyHomeboy

I am self employed. I get dry raped in taxes. In that income bracket, you're going to get killed as well. As was mentioned earlier, you get to pay both sides of SS, plus a 15% self employment tax. I also recommend talking to an accountant. You may want to set up an S-corp, or something to that effect to get some tax benefits.

Jeremy

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Both sides of SS = the 15%, there's nothing extra to pay. He will have to pay both side of SS plus Fed and CA taxes and I think that's it. I assume his new employer has a 401K plan. If not I think he could establish a SEP IRA and contribute up to 25% of his self employed wages.

I think the key is to establish a written agreement as to what you will be doing, the contract rate, and any other items like travel expense, costs of anything required to facilitate the contract.

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Originally Posted by Jimvr4

Both sides of SS = the 15%, there's nothing extra to pay. He will have to pay both side of SS plus Fed and CA taxes and I think that's it. I assume his new employer has a 401K plan. If not I think he could establish a SEP IRA and contribute up to 25% of his self employed wages.

I think the key is to establish a written agreement as to what you will be doing, the contract rate, and any other items like travel expense, costs of anything required to facilitate the contract.

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Good call, I screwed that up and typed the same thing twice. Damnit, lol.

You do get to deduct the employer-equivalent portion of the self employment tax from your gross. Only affects income tax though. It does not affect net earnings.

So confusing...and this is why I have an accountant. :D

Jeremy

There is absolute truth in the self-employment tax.

When I was about 20 or 21 I got a job on a crew of a company that mainly fiberglassed old concrete swimming pools. I already had experience in that field from a previous job (mainly as a tool bitch, but whatever)

I was hired at $7.00 per hour straight pay. If I worked 40 hours I got a check for $280 at the end of the week. If I worked 70 hours, I got a check for $490 at the end of the week.

The company owner was a little bit sleazy and didn't inform me I was going to get a 1099.

Anyway, after a few months I had a huge blow up with almost kicking the shit out of one of the forman, and I quit for the forman's safety.

Tax time rolled around and I filed my taxes around February 15. Well February 27th rolls around and I get a 1099 in the mail from said company. I figured I would let it play and see if things caught up, and they did. A few months later I got an IRS notice saying I owed over $2000 in taxes due to unclaimed income from my 1099, self-employment tax, etc.

After I looked into all the tax codes and talking to my aunt who owned her own business I basically proved that I was not an independant contractor as indicated by my 1099. Just by elimnating the self employment tax I went from having to pay over $2000, to having to pay just over $700, including penalties.

BTW, I think everything I told the IRS about the company got them in some trouble too.

Sucks that you had that happen Brian. Your employer was an idiot if he thought he could get away with that. You can bet the IRS came after him for failing to pay the employer portion of FICA and Medicare taxes for his employees!