Taxes/salary question

I have very good insurance from my employer and I kick in $400 a month for a wife and a baby.

I think they kick $600 to $700 per month.

Whenever you talk about a position with HR, most times they will say $65,000 for a $40,000 position because of all of the benefits added into the salary.

I hate to say it, but $2,500 will not be that much after everything is sliced out.

 

Wow, tons of advice, good and bad. Thanks folks!

My friend is single, with only her own (typically "fairly cheap") medical bills to pay. And, apparently, it is an independent contractor situation, just without a contract (I know, sketchy...). Apparently some Rivals or Scout-type thing (she knows, but I like to keep things vague).

It sounds like she's really considering taking it, so any last words of warning or advice I can throw her way before she jumps in over her head?

 

It's not that unusual to do work like this without a contract.

She's essentially in the same boat as most freelancers. She'll be earning 1099 income (that's the form you receive stating independent, untaxed earnings), so please tell her that she has to begin thinking of herself as a small business. She needs to set aside her likely tax bite, as stated. If she can't discipline herself to do this she'll be in genuine trouble come tax time. She needs to save every receipt. She needs to learn the broad outlines of tax law governing the operation of a small business, and how to itemize her deductions - for example the 'home office' deduction. She'll have to be much more alert and responsible to this kind of stuff than she has been in the past.

She may be eligible to join something like the Freelancers' Union, which would allow her the chance to buy into their group health plan.

She may also want to begin developing other freelance relationships, so that she has a transitional income if this job suddenly disappears.

 

Her car (gas) will be a write off. That is a huge potential write off.

Good advice about the "office" in her home.

 

Fascinating how this differs from country to country.

Up here there's no way on God's green earth that this person could be considered an independent contractor if this "job offer" was for a full time gig.

Sbe'd be considered an employee. Taxes, unemployment insurance and Canada Pension Plan would be deducted from each pay cheque plus the employer would have to make their contributions to the last two.

Back in the 90's the government closed the door on the scam where companies would have full time employees on the books as "contract workers" to avoid having to pay benefits. They'd take into consideration little things like whether the "contract worker" had their own extension at their office and whether they had voice mail.

And there's no way anyone who had a full time job with one employer would ever get away with calling themselves a freelancer. The Canada Revenue Agency (our IRS) would be all over that.

 

"Taxes? Don't worry about taxes."

 

My car, gas, computer, voice recorder, pens, notebooks, internet subscription (work from home), electricity, cable subscription (for covering random events via blog) are all write offs for me.

Still afraid I'm not putting up aside. I might be back on Ramen come next spring.