Re: Contract salary calculation question

Subject: Re: Contract salary calculation question
From: Elna Tymes <etymes -at- LTS -dot- COM>
Date: Mon, 27 Apr 1998 09:15:00 -0700

Margery -
> Does anyone know a formula for figuring out net and gross income? Say, for
> instance, if you are offered a job at $20/hr, how would you calculate yearly
> gross and net income from that?

First off, deal with the problem of what $20/hr. translates into an
annual income. Most contractors use a rule of thumb that says that a
year's work translates into about 2000 hours a year, so your $20/hr.
translates into $40,000/yr.

Secondly, you have to factor in taxes and other deductions. Some of
your deductions are going to be the same, regardless of your salary:
your health insurance premium, for instance, in some places your
contribution to a state disability fund. Others of your deductions,
however, are going to depend on a percentage (in many non-US countries)
or a tax bracket, and that can be offset to varying degrees by the kinds
and number of deductions you can take. For this, you need the kind of
tax chart that comes with your income tax preparation guide.

That said, however, a rather general rule of thumb is that you'll lose
about a third of your gross income (in the US) to taxes and the like.
There are LOTS of exceptions to this - some wily folks have figured out
how to pay very little in the way of taxes - so don't use the 1/3 figure
as anything more than a general guide.

Elna Tymes
Los Trancos Systems

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