Contractor and taxes

littlefranciscan · 12-29-2006, 01:18 PM

How much can you save by filing taxes as an independent contractor.

How much taxes must you pay out of each check for taxes as an independent contractor?

Can anyone tell me this? Thanks ahead of time

NeedHelp · 12-29-2006, 01:47 PM

No idea. I didn't know there was a difference between normal filing and filing as an independent contractor.

**techni68** · 12-29-2006, 01:51 PM

I heard there is a difference too..so when someone finds the info, they will be helping a handful of people. I know I will have to file some taxes as a 1099!

**xXHalfSliceXx** · 12-29-2006, 02:39 PM

So filing as Self Employed? Well as an employee you only have 2 deductions, Kids and the interest off your mortgage.

Self employed, well there are about 28 different categories that you can deduct from your taxes.

EXAMPLE:
Lets say you have a twin name BigF and he is an employee, and you LittleF are a contractor (Self employed)

3 Steps
1. Lets say you make $1000
2. Pay 30% in Taxes
3. You want to buy a $700

BigF - Employee
Step One he has to earn the money
1. $1000

Step 2 as an employee you automatically have taxes taken out. So 30% of 1000 is $300 that leaves you with
2. $700

Step 3 you either can spend it or save it, in this expample you are buying a PC which is $700. Leaves you with $0. Well not nothing, you got the PC.
3. $0

So filing as Self Employed? Well as an employee you only have 2 deductions, Kids and the interest off your mortgage.

Self employed, well there are about 28 different categories that you can deduct from your taxes.

EXAMPLE:
Lets say you have a twin name BigF and he is an employee, and you LittleF are a contractor (Self employed)

3 Steps
1. Lets say you make $1000
2. Pay 30% in Taxes
3. You want to buy a $700

LittleF - SelfEmployeed
Step One you have to earn the money
1. $1000

Step 2 Being self employeed by law you are able to spend before you pay taxes. So 99% of the time a Computer is a good investment for a business, even if you do contract work, you have to print check with your PC. So you buy the $700 computer leaving you $300 left over. Or "Net Income before Taxes"
2. $300

Step 3 you still have to pay taxes, but you pay on the $300 unlike the employee in the first example. So 30% of $300 is $90 you pay in taxes. Leaves you $210 left in the end. A 21% pay increase, just for being a business owner.
3. $210

But there are lots of other ways. Maybe go by a local tax company and ask them where you can get some information on that kind of stuff.

mysticalone · 12-29-2006, 03:26 PM

I know that tax time is coming around when forum questions are centering on taxes. I know I was told that when working from home you can claim: electric, rent, internet, telephone(if used for work) , fax nubmer , 800 number etc. . Am I correct on this?

**xXHalfSliceXx** · 12-29-2006, 09:17 PM

Originally Posted by mysticalone

I know that tax time is coming around when forum questions are centering on taxes. I know I was told that when working from home you can claim: electric, rent, internet, telephone(if used for work) , fax nubmer , 800 number etc. . Am I correct on this?

Well some of it. There are stipulations.
Electric, no

Rent, no - You can write off the square footage of your office in your home, if you OWN your house.

Internet yes - if its in your name.

Telephone - I write off my cell phone bc i have a home phone. But if i do not have a home phone, i can only write off half of my cellphone, bc there is personal use in there. You can completely write off your home phone if you have a 2nd line.

800 Number - Yes