Taxes/salary question

Perhaps this should go in the journalism folder, but whatev... I'm trying to help my friend figure out a job offer.

Here's a job hypothetical:

$2,500 per month flat fee; pay your own taxes and health insurance and such...how much would that run? And, technically, you're not classified as an independent contractor (because they'll be able to pay for her travel, rather than her paying and getting reimbursed) - so I don't know exactly all the taxes to help her out...

Advice and such? How much $$ would all the taxes and everything run? Is there an IRS site that can help me figure it out?

Thanks!

 

Agreed with playthrough. At my current gig, I wasn't getting taxes taken out because the bosses were running background checks through an auditing company.

A month after I first began working there, I got word that I was cleared. My next paycheck had taxes taken out.

 

$2,500 a month would be $30,000 a year, which would be in the 15 percent tax bracket, which would mean $4500 in taxes or $375 per month. That doesn't include state taxes.

Medical would depend on whatever kind of insurance deal your friend could work out. But I would say it's probably an average of $2,000 a year or $166 a month.

So take $550 off the top of that offer.

 

First, that sounds a little fishy--you're either an independent contractor or an employee. I'm pretty sure the IRS wouldn't like this arrangement too much.

And speaking of our friends at the IRS, be sure to remind her to pay quarterly taxes if she takes this gig. They frown on paying them all on April 15.

 

Ace, I would say that any sort of decent insurance would cost much more than $2K per year.

 

Understand something else. If you are in independent contractor, you have to pay double the Social Security and Medicare taxes (the contractor has to cover the matching that an employer usually covers.) This means that 15% will not cover the taxes come April 15. Go for 20%-25% to cover this extra expense.

If the company is not taking out taxes, then you are an independent contractor.

 

Oh, decent insurance? It would all depend on what kind and how well covered. You could probably do a high deductible, etc. But then you pay as you go.

 

My decent (and by decent I mean affordable) insurance for a husband, wife and college-age child is $531 per month, with $7,500 deductibles per person, up to a maximum of $15,000 for the family. That is for three healthy people.

Something to keep in mind.

 

Until BHO is elected and she needs to put aside 55 percent of her salary in just Federal taxes.

 

RSC's partisan caterwauling notwithstanding, keep at least 1/3 of your earnings set aside for taxes and Social Security. Try to pay the IRS quarterly, as noted above. Find an affordable health care plan that suit your needs. There are lots of policies available online, with coverages that vary from state to state, so you can usually find something affordable.

On a brighter note, if you're being paid as an independent contractor, you'll also have many more deductions come tax time.

 

Putting something aside every month to take care of the tax man? Wow, this is a dicey proposition. 99.9 percent of people can't do it. Be careful.