No IC the taxes kill you

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When you work for someone you STILL PAY YOUR TAXES, your employer does NOT except for the 7.5 SS.  Look at your pay check, are not taxed withheld??? As an IC you are RESPONSIBLE for withholding your own taxes and sending them in but either as an employee or a IC -- you still PAY them, except for the 7.5 of social security.   Sorry but it bugs me when people say as an IC you pay your own taxes as it is incorrect -- you are RESPONSIBLE for paying your own taxes.  With your write off's, flexibility and most of the time more pay it does cover the extra SS you have to pay.  Been doing it for almost 20 years. 

The post above is not true.  As an employee the employer pays one half of your federal and state (if you have them) taxes.  It is not just half of the FICA they pay. It is half of the total federal (Fed, FICA, Medicare.)  I was an MTSO for 8 years and looked into making my ICs employees and just couldn't swing it plus try to offer benefits.

I have just accepted an IC position. I have never worked as an IC before. Do you set aside your tax money and pay it quarterly or at the end of the year. (for next year) Any advice on this would be much appreciated. Thanks!

You don't pay any more taxes as an IC than you do as a regular employee.  You pay your taxes differently and pay more up front than you do as an employee, but on the back end when you do your taxes it all evens out.

You have to pay your regular federal withholding.  It's the same rate that you would pay based on 0 deductions with a regular job.   You can use the tax table http://www.irs.gov/pub/irs-pdf/p15.pdf to figure that out.  Then you have to pay the whole FICA tax of 15.3%.  Half of that is the employer's portion, which you don't have to pay as an employee.  The other half and the federal withholding you already pay as an employee.

When you do your taxes at the end of the year, you enter half of your self employment FICA tax on line 27 (along with a schedule SE) and you deduct it from your gross income. 

So you have to pay more up front, but you don't pay more in the long run.

I pay 25% to the feds every time I get paid and I pay 5% to the state every time I get paid.  A lot of people like to do it quarterly, but I like to get it over with so I don't think I have the money to spend.

You can make your federal tax payments on line here:  https://www.eftps.gov/eftps/ .   You have to sign up with them and then they mail you paperwork with online passwords and stuff, so it takes about a week to get actual access, but it's worth it.  It's where I pay all of my taxes.  Your state probably has an online presence where you can pay your state taxes as well.

I've only ever been an IC so I can't compare working as an IC to working as an employee on production.

I am fairly new to the IC status.  Approximately what percentage should I be putting away for taxes (federal, state and local).  I know it varies, but just a baseline amount please if anybody can help me out?  I would like to start this with the new year.  Where do you put the money, your regular savings account or open a separate account?  TIA. 

K

your spouse have extra taken from their check.  How much to save you if you need to pay quarterly depends on your income bracket, but around 30%.

The above post made no sense.   Having to pay for bennies and working for benefits at another company.  Of course you have to work to get bennies, but if a company you work for pays your benefits that results in a higher rate of pay and if you have to work the more you get for working the better. 

when paying self-employment tax, does that include unemployment taxes?  I was thinking of filing since it looks like finding another job may take a long time. 

and insurance and all withholdings (1099 status).  A statutory employee has FICA withheld and usually Social Security (W2 status).  Both have to turn in schedules to their companies, but ICs have a little more flexibility.  Also, ICs supply their own equipment.  Statutories have the option of company supplied (with a rental fee taken from their check, which is waived a lot of times for high production) or use their own equipment.  No bennies for either.  An IC just usually needs to meet client turnaround times and can stop and start a lot more than a statutory or full employee status person does. 

an option. Sometimes they are a requirement. You should check with an accountant, but I had a personal experience during my early years of statutory employment status with MQ whereby I did not pay estimated quarterly taxes. Because of some legality, I ended up paying a penalty because according to the IRS I should have been able to predict that my estimated taxes were going to be more than the previous year and therefore I should have paid them ahead.

Again, check with your accountant on that, but I would strongly advise estimated quarterly tax payments.

Contact your state attorney and see what they say.  As for taxes, if they withheld them but DID NOT send them to Federal or state, as long as you had proof that they paid it, you can still count it when doing your taxes.  They will go after the employer for what they withheld and did not pay to the federal and state.  This has happened to me before and they went off my W2 forms and not what was actually sent in.

How can you make double the money without paying back into SS? That's a question I have had for a long time. You're allowed to make so much money a year on SS. If you go over that, you have to pay back $1 for every $2 you earn unless you hit that golden age of 70(?).

Here's the scoop on SS and taxes.  They  do not penalize you once you reach full retirement age, HOWEVER, if you continue to work they will continue to deduct SS from your paycheck and at the end of the year if you make over a certain amount, you also pay taxes on your SS benefits up to 85% of what you receive from SS..

Contrary to what chatty says, they do not want you to take early retirement.  They encourage you to wait until full retirement age.  That way you might die and they never have to pay a penny.  The death benefit to your beneficiary is a whopping $225.  If you do the math, you are much better off taking retirement at the earliest possible moment.

Don't know about you, but I have a local tax I think it's 1.5%, where I live.  They don't deduct that from my pay like my state and federal taxes are deducted. I asked them to but they refused.  So I'm going to have to come up with that money next year to pay my local tax.  I can't afford to save it now.  Those of you who have a local tax whrere you live better check your pay stubs and make arrangements. 

for income taxes.  That doesn't include Social Security, does it?  Can you pay your own Social Security if you are an IC?  I don't get it.