Is the amount of tax liability the company pays decrease by the amount they paid me that is reported on the 1099?
2007-03-09 05:38:32 · 4 answers · asked by Mike J 1 in Business & Finance ➔ Taxes ➔ United States
You are an expense to the company so it decreases their net income which in turn may lower their tax liability. The amount paid to you does not go directly against their tax liability though.
2007-03-09 05:44:25 · answer #1 · answered by R Worth 4 · 1⤊ 0⤋
The other answers are correct. But the company also pays less in taxes on employment taxes. You now pay your share and the employer's share of social security taxes because you are contract labor rather than an employee.
The company also saves money on other indirect costs such as worker's compensation, sick & vacation time and health & retirement costs.
2007-03-09 07:15:44 · answer #2 · answered by RAG 2 · 0⤊ 0⤋
You bet it does. Just like any other employee, you don't pay taxes on most operating expenditures, only the profits left over after all your expenses.
2007-03-09 05:42:28 · answer #3 · answered by Yanswersmonitorsarenazis 5 · 0⤊ 0⤋
You are a deduction to that company since you are an expense.
2007-03-09 05:43:41 · answer #4 · answered by ? 4 · 0⤊ 0⤋
Yes they deduct it.
2007-03-09 05:42:46 · answer #5 · answered by spicertax 5 · 0⤊ 0⤋