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Subject:Re: QUESTION: W-2 vs. 1099 Hourly Rates From:Michelle Nolan <nolanmj -at- HOTMAIL -dot- COM> Date:Tue, 23 Dec 1997 09:30:42 PST
I'm not an expert on this either, but here's my understanding:
If you are a W-2 employee, the company shares FICA payments with you.
The employee pays 7.65% on the first $62,700 (1.45% above that).
As an independent, you pay the entire amount in the form of Self
Employment Tax- a total of 15.3% on the first $62,700 (2.9 percent
Medicare above that). However, you can deduct half of the Self
Employment Tax from your federal income tax, so you get a good chunk
back. In addition, you pay Self Employment Tax on 92.35% of your
income, not the entire sum.
In the end you are paying more tax as an independent, but perhaps not as
much as one might think. Personally, I have this factored into my
hourly rate.
Hope this helps-
Michelle Nolan
Lead Technical Writer
The Nolan Technology Group, Inc.
(703) 768-3497
nolanmj -at- hotmail -dot- com
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