What should I expect to pay in taxes as an Independent Contractor in New York city?

Question

What is the tax rate for independent contractors in NYC? My average income is around $2,200/month. When do I pay taxes? Will my work give me something like a W2?

Answer 1

1. An independent contractor will get 1099 from the employer. If you have expenses associated with this job, you file Schedule C (Form 1040) Profit and Loss from Business (Sole Proprietorship) on which you record your income and expenses.

2. On your income, you will pay social security and medicare taxes at 15.3%. For this you use schedule SE (Form 1040). (With 1099, the employer does not have to pay their part of employment taxes of 7.65% and some other taxes.)

3. You are responsible for paying your own taxes including estimate tax payments.

4. If you were a W2 employee, from your income social security and medicare taxes are withheld by your employer at 7.65%. You normally can't claim expenses associated with the job unless you itemize your deductions. Also your business related (job related) expenses are subject to 2% AGI limit.

5. Assuming that your net income for 2007 on schedule C is $24,000. Your SE taxes are $3,672. If you are Single, your federal income tax is $1,612, then you will have State tax.

Answer 2

This communicate board receives a lot of questions from clueless those who're erroneously dealt with as autonomous contractors and do not are conscious of it. You sound like one in all them. Does the corporate say you would possibly want to ensue at a particular time and stick with classes or do you merely might want to get the pastime executed? Do you've the skill to make more advantageous earnings or wade through a loss searching on the way you carry out? Are you paid by technique of the hour or the pastime (the latter with a life like expectation of earning more advantageous than minimum salary as a salary earner). when you're dealt with like an worker you aren't to any extent further an autonomous contractor. The company can not arbitrarily call you an autonomous contractor and could be held answerable for taxes that would want to were withheld at the same time as the state or IRS audits them.

Answer 3

Your work will give you a 1099 in January instead of a W-2, but it will show what you made for the year.

Taxes will total 1/4 to 1/3 of what you make, or even a little more, depending on the state and local taxes where you live - in NYC, probably around 1/3. For federal, you need to file quarterly estimated returns and pay in each quarter.

Answer 4

W-2's go to employees. Independent contractors receive a 1099.

In NYC, you pay:
1. Federal income tax (up to 28%?, but less at your income level, maybe 15%)
2. NY State income tax (up to 6.85%)
3. NYC income tax (up to 4%)
4. Federal self-employment tax (15.3% of "net earnings", which is defined as 0.9235 times profits [income minus expenses])
5. NYC unincorporated business tax (not sure of the rates)

Answer 5

My canned explanation to clueless independent contractors seems to get posted every day:

Some employers try to get around paying employment taxes (social security and unemployment) and other employee benefits like workers compensation insurance by improperly classifying employees as independent contractors. If you are required to show up for work--personally--at a particular time, punch the clock, use the employers equipment and are paid an hourly rate, you are an employee. If you didn't understand the difference when you posed your question, I would be even more convinced that you are an employee. What is your preference, Slotted or Phillips? Complete an IRS Form SS-8 to get an official ruling on your status. This will help you get unemployment if you get fired.