Contract work meaning I am not employeed by a company, they are just paying me an hourly rate for work.
Do I have to pay into social security as well...how does that work?
2007-12-19 12:05:51 · 5 answers · asked by queen of snarky-yack again 4 in Business & Finance ➔ Personal Finance
You need to calculate this based on your expected tax bracket. The previous answer that said 30% is a good guide, but depending on how much you actually made may not be enough(or it may be too much). The link below talks about Estimated taxes and will guide you on how to calculate it.
Also, just be aware that if you are going to owe more than $1000 in taxes you may have needed to make estimated Tax Payments. If you were required to and did not you may be subject to penalties and interest.
It also may be to your advantage to purchase one of the Tax Preparation software programs as they will guide you through all of these items.
2007-12-19 12:41:02 · answer #1 · answered by OC1999 7 · 1⤊ 0⤋
The best number I have heard is 25% for Federal taxes including SSI and income tax. State tax depends on which state you are in. You actually pay a 'Self-Employment' tax equal to the employer and employee portions of Social Security tax. If you have to ask, you should talk to a tax professional TODAY. If you are not keeping the CORRECT records now, your taxes will be a nightmare.
LADY AT THE LAKE: There is NO 23% Federal tax bracket. Therefore NO ONE is in that bracket.
2007-12-19 22:29:52 · answer #2 · answered by STEVEN F 7 · 1⤊ 0⤋
Put aside 30 percent... really. You'll need to pay both federal and social security taxes. An average tax bracket will put you in to 15 percent for each. I had my own private practice for a while... get a really good accountant, they'll save you more than they cost.
Make sure you figure for this in your fee when you contract with a company to do work for them.
2007-12-19 20:12:39 · answer #3 · answered by Anonymous · 2⤊ 0⤋
You are doing business as_____________, which is a sole proprietorship and your SS# is your Employer number. You should request 1099 for for your work payments. Then, other then a few extra forms, you just file as usually, and you do need to report on the 1099 forms. There are advantages and disadvantages in doing what I described; a bookkeeper consultant might be able to get you squared away.
2007-12-19 20:44:10 · answer #4 · answered by RT 6 · 1⤊ 0⤋
Normally, if you put aside 30-32% you will be OK at the end of the year. Most people are in the 23% on Federal and 7% on the State withholding.
2007-12-19 20:37:07 · answer #5 · answered by LADY AT THE LAKE 3 · 1⤊ 2⤋