If i work as an independent contractor and make about 2400 a month how much should i put aside for taxes?

Answer 1

The answer depends on your filing status, your other income, and your dependents.

If you are single with no other income and no dependents, and no expenses from your work, you will owe about $6,700 in taxes. So I would set aside $600 a month. That will cover your federal taxes, and some of your state taxes.

To avoid an underpayment penalty, you should forward the amounts set aside as estimated tax payments.

Answer 2

The bewildered independent contractors are coming up thick today. I can immediately recycle my answer to the previous question.

I have a canned explanation to apparently clueless independent contractors:

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. The basic issue is the amount of control the employer has over the worker. 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. When you file your income tax return, you can attach Form 8919 Uncollected Social Security and Medicare Tax on Wages and only pay the employer's half of social security. You will still have to cough up all the income tax. IRS and the states are stepping up enforcement in the abuse area.

BTW: $2,400 per month does not sound like a whole lot for someone who is a real independent contractor. It is the equivalent of $2,216.40 without the benefit of workers compensation or unemployment insurance benefits.

Answer 3

With self-employment income of $28,800, assuming no business expenses against it, you'll owe $4,069.31 in Self-Employment tax. You'll also owe $2,616.25 in income tax on top of that assuming that you are a single taxpayer with no dependents and do not itemize and do not qualify for any credits such as the EIC, Child Tax Credit or Additional Child Tax Credit. That brings your total tax (excluding state income taxes) to $6,685.56.

If you have business expenses to offset any of the income or if your filing status is other than as described above you'll owe less tax, possibly much less. Without knowing all of the details of your personal situation I can only give you this worst-case estimate.

You can't just set that much aside. You need to make quarterly estimated tax payments using Form 1040-ES of $1,671.39 to be even up at filing time.

You need to pay in at least $1,421.39 to avoid penalties and interest for underpayment of estimated taxes. You'd have a $1,000 bill at filing time to pay if you paid that much.

Therefore you need to set aside at least 23% of all of your earnings and make the quarterly payments on 4/15, 6/15, 9/15 and 1/15 of the following year.

Answer 4

I assume you're talking about taxes in the U.S.
Social Security is 14% - that's 336. For income tax, with $28,800 yearly salary, you probably won't pay any income tax. Probably the same answer for state income tax. Medicare - I can't remember how much that is, but all in all, Social Security tax will be the biggest hit for you with that low of an income.

Answer 5

30-40%. 40-50% if you are married and your spouse as job and you live in a state with an income tax.

Answer 6

Best to figure about 20% that way you should have a surplus. While that may seem steep you ahve to think the way the government does, " we want ours first".
Good luck on your venture.