I'm new to this type of work . I make a standard daily amount, and I'm confused to how much I should withhold and what deductions I am now eligible for.
2006-06-30 07:30:46 · 5 answers · asked by Lindsey C 1 in Business & Finance ➔ Personal Finance
I would personally put aside about 30% ... you'll never know what tax bracket you'll fall in at the end of the year.
2006-06-30 07:45:49 · answer #1 · answered by ujenfo 3 · 0⤊ 0⤋
Are you being paid with w2 or 1099?. If w2 most people take 1 exemption (if no dependents) , this is safe because you will not owe anything to the feds when its time to file your return and avoid penalties, taxes will be taken out automatically. If you will be 1099d (no taxes withheld), you will be taxed @ 30%, in example if you make $20 and with expenses you net $10 (50%), youll be taxed $3, this does not include taxes from other sources and is only an example, so at least plan for 30-40% (if you expect to have significant expenses). you can also opt if you have an overpayment to carry them over to next tax year. You can basically deduct all items that are required to operate a business, you should consult a tax advisor, it will pay off if you make over 50k.
2006-06-30 14:49:50 · answer #2 · answered by stucaz 2 · 0⤊ 0⤋
If you're single, put 25% back into a savings account that you won't touch. You'll need to do some online research - if your salary is over a certain amount (pretty high amount!), you'll have to pay quarterly taxes, not just one big bill in April. As for deductions, there are lots of them, and some that you would think are "obvious" are not unless they go over a certain percentage of income. Again, you should do some research, and if you're clearing over $100,000 a year, get a tax CPA. In the long run, they pay for themselves.
2006-06-30 14:35:18 · answer #3 · answered by PuterPrsn 6 · 0⤊ 0⤋
As a contract employee (you are considered self-employed by the IRS), you will have NO employer contribution to your Federal Income Tax, State Income Tax, Medicare, and Social Security, you will bear the entire burden yourself. Check the IRS website for how much you will have to pay for the federal portion (FICA, SS, Medicare) and your state treasury/revenue service (if you have a state income tax). I'd set aside at least 30%. You can make estimated payments to the IRS (and, as I recall, you are required to pay quarterly on Medicare and SS).
2006-06-30 20:47:28 · answer #4 · answered by homeschoolmom 5 · 0⤊ 0⤋
It depends on your yearly income, but you better hold back at least 25%.
2006-06-30 14:34:14 · answer #5 · answered by applpro 4 · 0⤊ 0⤋