If I coul invest my money instead of apy social security I would have a more stable future.
2007-07-18 06:13:51 · 8 answers · asked by Anonymous in Business & Finance ➔ Taxes ➔ Other - Taxes
Bostonian and some of the others have it correct. Since you want to invest in your future and you have now learned that if you did somehow get paid on a 1099, that you end up paying an additional 7.65% in Social Security and Medicare taxes. My suggestion is for you to continue being paid by your employer as an employee, but invest the 7.65% you would have had to pay out of your pocket in a ROTH IRA. The beauty of a ROTH is the money invested grows tax free and is also tax free when you withdraw it after you reach retirement age.
Good luck,
2007-07-19 09:24:26 · answer #1 · answered by NGC6205 7 · 0⤊ 0⤋
You need to be self-employed, work for more than one employer, set your own hours and work days, not take direct supervision of your work activities, and do a function rather than a specific set of tasks.
If you can't meet all those tests then the IRS will consider that the employer is scheming to avoid paying social security. The IRS site has a brochure on the subject.
2007-07-18 08:22:51 · answer #2 · answered by Rich Z 7 · 0⤊ 0⤋
If you are self-employed/independent contractor you get a 1099. If you are and employee you get a paycheck with deductions taken out.
Getting a 1099 does not mean that you do not pay all of the standard payroll deductions (such as social security), it means that you have to send it to the governing agency yourself instead of having your employer withhold them and send them in for you.
2007-07-18 06:24:09 · answer #3 · answered by MojosMom 2 · 2⤊ 0⤋
Legally you can't. If you're an employee then taxes must be withheld from your pay.
If you go into business for yourself, you'll STILL pay Social Security and Medicare taxes -- and you'll pay TWICE as much as an employee earning the same net income does.
As an employee you pay 7.65% in total FICA taxes on the first $97,500 and 1.45% after that. If you're self-employed you'll pay 15.3% and 2.9% respectively, so being self-employed will cost you MORE in taxes for the exact same future "stability."
2007-07-18 10:58:35 · answer #4 · answered by Bostonian In MO 7 · 0⤊ 0⤋
If you are employed or self employed, if you own a business you will pay social security.
Sorry thats the facts jack. You can try some crazy ideas out there but you run the risk of an audit and getting hit with penalties and interest.
2007-07-18 06:18:41 · answer #5 · answered by Tim 7 · 0⤊ 0⤋
You can't, if you work for an employer as an employee and not an independent contractor. If you could convince your employer to employ you as an independent contractor, THEN you would end up paying DOUBLE the amount of SS you now pay, plus the same amount of income tax. (since the self-employed pay the regular share of SS, PLUS the amount normally contributed by an employer)
Don't try to beat the system. It does NOT work.
2007-07-18 08:58:22 · answer #6 · answered by acermill 7 · 1⤊ 0⤋
Can you live without any benefits that your employer gives you now? Health insurance, 401K, sick days, paid vacations????? If you go to a 1099 status, you loose all benefits from the company. Plus, you’ll have to start to pay quarterly taxes and cover the same taxes you pay now……..and you'll still have to pay social security. You just have to pay it all by yourself, and deal with the filing headaches.
2007-07-18 08:25:10 · answer #7 · answered by Robin C 5 · 0⤊ 0⤋
...and to add to what others said, if you are self employed, you must pay all of your social security tax. Currently, your employer pays half of it.
2007-07-18 06:44:36 · answer #8 · answered by mister_galager 5 · 3⤊ 0⤋