Re: CORRECTIONS RE: QUESTION: W-2 vs. 1099 Hourly Rates

[Michele Edson <M-E -at- IX -dot- NETCOM -dot- COM>]

Hi I was just cleaning up my mail and saw this reply, whereas I did not
see the original question...  so sorry if my response doesn't match the
question...but the answer doesn't seem to be a right answer to any
question.

When you are paid on a 1099, you must complete form SE where you are
taxed accordingly ... which is approximately double what you would pay
as an employee).... on the 1040 you subtract 50% of this amount on line
25... so basically this is almost a wash when you compare what you pay
as a business (1099) and what is deducted from your paycheck as an
employee.

Specifically, for 1996 - you multiple net earnings by 92.35% and then
multiple that amount (or no more than $62,700) times 15.3%.  You then
get to deduct 50% on the 1040.  For amounts over $62,700, you are taxed
at 2.9% (of the 92.35)...

So there is should be no significant difference between W2 and 1099
hourly rates BASED ON SS/MEDICARE TAXES.

For further reading, try the IRS pub for small business..


Signed... a tech writer and latent tax specialist.



Wilcox, John (WWC, Contractor) wrote:
>
>  ----------
> From: Wilcox, John (WWC, Contractor)
>
> Now it's an exact company match on both the
> FICA and Medicare.  So now it's
>
> 6.2%   your share of FICA
> 6.2%   what should have been the company's share of FICA
> 1.45%  Medicare
> 1.45%  what should have been the company's share of Medicare
>
> Regards,
>
> John Wilcox, Documentation Specialist
> Timberlands Information Services, Application Delivery Group
> Weyerhaeuser, WWC 2E2, Box 2999
> Tacoma, WA 98477-2999 USA
> 253-924-7972  mailto:wilcoxj -at- wdni -dot- com
> (I don't speak for Weyerhaeuser, and they return the favor.)
>

	http://www.documentation.com/, or http://www.dejanews.com/