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I am also trying to figure out what to charge when moving from W2 to 1099
status. My question is about the 15% self-employment tax. As a W-2
I am already paying 7.5% of the tax, so wouldn't I need to add only
another 7.5% to cover the additional taxes?
Sherry Michaels wrote:
> You will need to factor in pay for vacation, sick pay, insurance and other
> benefits, E&O insurance if you choose to have it, any equipment costs and so
> forth. Basically, divide 2000 hours into your annual salary and add the
> costs (if you know them) of what your benefits, heat, light and sound would
> be. I'd also consult a tax specialist, because you'll need to handle a 15%
> self employment tax, and any other rules and regulations in your area.
> Another way would be to research it using a number of books, including Doug
> Florzak's "Successful Independent Consulting."
Sherry Michaels also wrote:
> It's very good to consult a tax specialist before you count on "writing
> off" anything.
> The 15% self-employment tax does not permit write offs. The IRS takes
> their 15% regardless.
> I've seen many new 1099 people stunned and amazed at their tax bill at the
> end of the year. Best advice I can give: consult a tax professional.
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