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| INDEPENDENT CONTRACTOR |
EMPLOYEE |
| -SELF EMPLOYED |
EMPLOYED BY OTHER |
| -NO TAX WITHHELD |
TAXES WITHHELD |
| -NEED QUARTERLY PAYMENTS |
MAY NOT NEED QUARTERLIES |
| -PAYS ALL SOC. SEC. TAX |
EMPLOYER PAYS HALF OF SOC. SEC. TAX |
| -CAN DEDUCT EXPENSES |
MAY BE ABLE TO DEDUCT EXPENSES |
| -CAN DEDUCT 100% MEDICAL INSURANCE |
MAY BE ABLE TO DEDUCT INSURANCE |
| -CAN ESTABLISH KEOGH, SEP & MAYBE DEDUCT AN IRA |
MAY BE ABLE TO DEDUCT IRA |
| TAX IS PAID ON PROFIT: |
| |
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GROSS |
= 20,000 |
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EXPENSES |
= 7.000 |
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PROFIT |
= 13,000 |
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15.3% SELF EMPLOYMENT TAX |
|
= 1,989 |
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*15.0% FEDERAL INCOME TAX |
|
= 1,950 |
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*7.71% MARYLAND TAX |
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= 1,002 |
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TOTAL TAX |
|
= 4,941 |
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| * DEPENDS ON YOUR PERSONAL CIRCUMSTANCES |
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15.0%
|
25.0%
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SINGLE |
$7,000- $28,400 |
$28,401 -$68,800 |
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MARRIED- JOINT |
$10,000-$38,050 |
$38,051-$98,250 |
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-
CAR EXPENSES
-
PAY PHONES
-
SUPPLIES (PENS, PAPER, ETC.)
-
PARKING CHARGES
-
ONE HALF OF YOUR SELF EMPLOYMENT TAX
-
YOU CANNOT DEDUCT TICKETS FOR PARKING, SPEEDING,
ETC.
| 1) ACTUAL EXPENSES: |
- DEPENDS ON % BUSINESS USE
|
| YOU CAN DEDUCT THE BUSINESS % OF THE FOLLOWING: |
- GAS & OIL
- CAR WASH
- REPAIRS & TIRES
- INSURANCE
- REG. FEE
- INTEREST ON CAR LOAN (OK FOR IND. CONTRACTOR -NOT FOR EMPLOYEES)
- DEPRECIATION
- CAR LEASE PAYMENT
|
OR
2) 36 CENTS PER BUSINESS MILE DRIVEN
CHOOSE ONE WAY OR ANOTHER WHEN CAR IS FIRST USED FOR BUSINESS
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BEST METHOD: DIARY
-
RECORD MILEAGE AT JANUARY 1 AND AT DECEMBER 31
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RECORD BUSINESS MILES EACH DAY
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WRITE IN PAY PHONE AND PARKING
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ALL OTHER EXPENSES NEED CANCELED CHECK AND RECEIPT.
BOTH ARE IMPORTANT
-
CELL PHONE BILLS -ITEMIZED -OR KEEP A LOG
-
KEEP RECORDS FOR 4 YEARS
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TO AVOID PENALTY -QUARTERLY PAYMENTS OF TAX MAY BE
REQUIRED
-
IF YOU HAVE ANOTHER JOB, OR A WORKING SPOUSE YOU MAY
OR MAY NOT NEED ESTIMATED PAYMENTS
-
YOU NEED EITHER:
- 90% OF CURRENT YEAR'S TAX PAID IN (CAN BE OFF BY UP TO $1,000)
- 100% OF LAST YEAR'S TAX (112% for AGI over $150,000)
- ESTIMATED PAYMENT DUE DATES:
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