Once again --- IC taxes - YOU only pay 7.5% SS additional

• IC Question - employee dinosaur
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  • Once again --- IC taxes - YOU only pay 7.5% SS additional - Patti
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As above post says, you do have to pay the employer and employee portion of the SS taxes.  BUT, you then deduct the employer portion of those taxes on your 1040 at the end of the year.  It's a pain because you have to shell the money out up front, but you get the deduction for it.

So, really, there's no difference in the taxes.  It's just a difference in how and when you pay them.

so who exactly is getting cheated?  And just who are you talking about when you talk about whether it is "fair" or not.  I don't give a crap how much taxes my neighbor pays.  It's none of my business.  And if I found out they were paying less in taxes than me, I would ask them how they heck are they doing it so I can do it too!

I just want ask, is it necessary to get personal and insult?  You disagree with me, fine.  But I've been called a liar, a cheat, a no-ingetrity thief, my intelligence has been insulted, and I have had my parenting skills questioned.  That is a little over the top.  If you cannot debate an issue without resulting to personal attacks, then YOU are the stunted one!

It is a very good thing that some of you work at home, ALONE!  You are sorely lacking in people skills and diplomacy.  Let me guess, when you worked in the office you were one of those girls who didn't like to share her desk, griped if someone dropped a crumb on your desk, and kept track of everyone's breaks, lunches, and line counts just so you could tattle to the supervisor!  I've worked women like you, it was like working with kindergarteners.  That's why I came home to work.  Do us all a favor, looking in the mirror, count your wrinkles, and realize that this isn't high school anymore!

Do you think when you are working for someone else that "they pay your taxes?"  We all pay our own taxes except for the additional 7.5% of SS as an IC you pay.  And I will bet that as an IC/MTSO I pay a lot less taxes than you do and I make more than you do.  I cannot understand the mentality of people that say "you pay your own taxes."   Your employer just "holds your money and pays your taxes."  I am just responsible enough to put the money aside and pay mine but as a IC/MTSO with all my deductions I pay on 20 to 25% of my gross and I am able to put aside $700 to $1000 per month in my retirement which is totally deductable.  Your statement is totally incorrect.

I am never sure whether to classify myself as an IC or small  MTSO as I have my own accounts.  But where I see a lot of the problem is that the doctors are not making as much as they used to, due to insurance company reimbursement, etc.  They are trying to save every penny that they can just like we do.   I keep my line charges probably quite low according to many standards but I make a a very good living and I cannot see charging the doctors 15 to 18 cents per line when I make very decent money at 11 to 12 cpl -- gross lines.  I also get GREAT tax breaks and though I have to pay the other half of the SS self employment, I still bring home more of a dollar than working for someone else.   I have also found it hard to find anybody that will subcontract to me that is truly dedicated and will work hard. (I pay  8 to 9 cents per gross line  and I deliver tapes and do all the printing, pick ups and deliveries)  I know that kids get sick, there are football games, etc. but this is still a job and you gotta put it first sometimes.   It is hard to find anyone that will work the TAT of  20 to 24 hours by the time I get the tapes to them.   Then that leaves the burden on me.   So I mostly stick to my accounts that bring me in $50 to $55 per year (and this gives me my benefits) and have turned down accounts because I don't want the hassle of the IC's to me and they could be going overseas right now.  But I think that the insurance companies are behind this more than the docs.  When your MRI is interpreted over in India -- do you get a break on the interpretation -- no but the insurance company gets a break on what they pay out so who pockets it???? 

My thoughts and I am sure I will get a lot of disgreements but that is okay we are all entitled to our thoughts.  Oh yea for this amount of money I do work 28 to 32 to hours per week-- just quit an in house part-time job as they wanted me at least 24 hours now, started out at 10 to 12 but the docs found out that they could make more money paying me to transcribe their tapes than to type their own notes in the EMR's even with templates.  So we will be around for a while.   Oh yea if I would have kept on with both jobs would have easily made $65 K but working 50 hours a week was getting to be a bit much.  

Patti

One suggestion that I have for all of you that are questioning IC taxes is to look at your past tax refunds when you were an employee and see what percentage was withheld and do about the same.  Yes there is that extra 7.5 for SS but it  is also a deduction and you can look to find 7.5% of your pay as a deduction whether it be in the form of your own retirement fund, etc.  When I saw that I was paying so much to the IRS, I decided that if I could afford that I could start my own retirement fund and did it.  I now contribute close to $1000 to it per month.  So go online, get an old copy of Turbo Tax and run off the schedule C's and see what deductions can be taken for a small business and then see what you can do to save in taxes.   Look at your old tax returns and if you are married have your husband over withold if you can't do it yourself.  You are not paying that much more when you work for yourself you are just in charge of paying them yourself and not allowing someone else to hold it out from your check.   But look at old returns, plan, plan and plan.  When you look at your net vs your gross that will tell you what percentage your employer is holding out.   Either as an employee or an IC we all pay our "OWN" taxes but as an employee someone just does it for you.   Good  luck to all of you.   Patti

They are right in that the SS is 15.7% but remember when you were working for someone they held out 7.5% from your check.  Look back at your checks as an employee and see what was held out -- the only diference from being an IC is that you have to be responsible to pay the taxes and not have someone withold them for you.   Also look to see what deductions you have, take those off and you pay 15.whatever of that amount in SS.  It all depends on what you are making.   I start out with 45K+ and pay SS on about 15K.  But I have a retirement fund that I am contributing to and that takes a lot off.   But if you look at your paycheck as an employee you will see that 20 to 25% is being taken out of your check and you ARE paying those, someone just makes sure it is deducted.   If you husband is working as an employee (my ex-was) I had him hold out as single none and we always got something back.     Either way as an employee or an an IC -- we allpay it in the end.

I have recently taken a job as an IC, this is my first IC position and I was wondering if any of you wise folks could give me some advise regarding income taxes and such.

In the past I have always used TaxCut or TurboTax for my income taxes.  Is there a similar product for the 'self employed' that is as helpful?  Does anyone have any experience with any of these?

Also, MUST I pre-pay taxes and/or SSI quarterly?  I ALWAYS get all my taxes I pay in back in a refund and my income is essentially the same as my previous employment.

Thanks!

In 18 years of filing as an IC and owner, have never paid quarterly while married.  Always had my husband over withold and even some  years had to pay a little (under $500) but they have yet to question (knock on wood).   But my income and write-offs always stay about the same, every third year a new computer, then the next a printer, then some transcribers, etc.    The government does not care who or where the tax money comes from when filing as a joint return as long as they get it.   You are just combining your income as if each of you had a job but you are an I/C instead and don't have someone withholding from your earnings..   I always filed electronically and had my refund within a week.   Heck you can borrow the money to pay your taxes and they don't care as long as they get paid.  

Patti

Can anyone give me a list of things that I am able to deduct for working at home.  I am new at working at home and need some specifics.

Thank you!!

I know that you can use a computer as a deduction for your business, but what happens if my husband wants to build me one instead of buying it in one piece?  Would I still get to write it off?  He is a big computer person (not for a living) and wants to build my next one instead.  He builds peoples computers quite often for them.  Will I just keep all the receipts and subtract that or am I better off to buy one from Dell or Gateway or etc? 

Thanks for any advise!

New to this site, but I hope that you guys can help me out.  Last August, I was dropped from employee status to IC.  I don't know of anyone else in my area that works from home as I do so I have a question for any of you that are IC's.  When you file taxes you get a 1099 form from the work site, do you keep out money in a separate account for your taxes the following year or do you pay in throughout the year? 

I know that the tax guy will tell me what we are supposed to do, but I was just trying to get a better idea about what other people in my position do.  Thanks for any responses.