I have accepted a position with an online place as an independant contractor. They're legit and issue a 1099 should earnings be above $600 for a calendar year (but you're paid the full gross amount; witholding is up to you), but this is for I assume Federal and State Income tax. I have heard I am also responsible for my own FICA (DOUBLE the amount I pay through my payroll at work, where my employer pays the other half?) for SS/Medicare witholding. Is this true? Is there anyway to get out of this legally (after all, I don't expect SS to be solvent by the time I am gray haired)? Thanks.
2007-10-05 17:17:32 · 6 answers · asked by ebillar 1 in Business & Finance ➔ Taxes ➔ United States
Yes it's close to true - actually you get a smal break, and only pay the 15.3 (doubled) % on 92.35% of your net, not quite all of it, and you can take half of the total self-employment tax as an adjustment to income on your 1040.
And no, there isn't a way to opt out.
2007-10-05 17:29:46 · answer #1 · answered by Judy 7 · 2⤊ 0⤋
Q. I am also responsible for my own FICA (DOUBLE the amount I pay through my payroll at work, where my employer pays the other half?) for SS/Medicare witholding. Is this true?
A. Yes
Q. Is there anyway to get out of this legally (after all, I don't expect SS to be solvent by the time I am gray haired)?
A. If you have conscientious objections to social security insurance because of your membership in and belief in the teachings of a religious sect recognized as being in existence at all times since December 31, 1950, and which has provided a reasonable level of living for its dependent members", you can become exempt, but must file Form 4029 and receive IRS approval.
2007-10-06 13:26:46 · answer #2 · answered by StephenWeinstein 7 · 0⤊ 0⤋
As an independent contractor, you only pay FICA and other taxes, after you take your expenses as a write off.
Get familiar with our tax system now, because you sound like a young person just getting started. There is no excuse for living in the United States and not paying some part of your expenses for being here. The last thing you should worry about is the rumors about retirement. If you are smart, and you are concerned, take some of your money, and invest right now and always in a 401k retirement fund for your self.
Right now, save all your expense receipts for tax time. Get Turbo tax and do your own taxes. And call the IRS for free publications on 1099-MISC deductions. Read, read, READ: this is not hard, and you can save yourself lots of money understanding taxes for now on.
2007-10-06 13:40:12 · answer #3 · answered by Nifty Bill 7 · 0⤊ 0⤋
There is no way to get out of social security taxes. How ever if you are really an employee then you can pay only your half 7.65% and not the full 15.3% that an independent contractor has to pay. If you think you are an employee file for SS8 http://www.irs.gov/pub/irs-pdf/fss8.pdf
If you do this be prepared to find another job, your employer will probably fire you.
See pub 15a Who are employees on page 3 and Employee or Independent Contractor on page 6 http://www.irs.gov/pub/irs-pdf/p15a.pdf
2007-10-06 05:56:49 · answer #4 · answered by Charlie & Angie G 4 · 0⤊ 0⤋
Yes, this is true. No legal or moral way to get out of this.
2007-10-06 00:22:54 · answer #5 · answered by Jonathan B 4 · 1⤊ 0⤋
SS will ALWAYS be there for you, in some form. Don't listen to the scaremongers.
2007-10-06 12:15:20 · answer #6 · answered by r_kav 4 · 1⤊ 0⤋