I started work at a new job in January. Officially, I was hired as an "independent contractor" for the first three months, meaning they're just giving me a paycheck and it's up to me to file my own income taxes through the end of April. I can't wait to see what my tax bill is going to be next year.
Income tax for an independent contractor means you're your own business, so you fill out a schedule SE and schedule C, and it's 13% of your income after work deductions and expenses. If you use your car AT work (not to drive to work), IE you're driving while on the clock, if you keep written records of mileage you can deduct it on your schedule C. It's 55 cents a mile right now. There are other deductions, like if you have to buy equipment for your job, or supplies, keep receipts and you can deduct those as well. If you buy things to sell, you can deduct the cost of buying those things, but then you have to add the amount of profit you made from selling them. Ect Ect...
I'm actually in a different category from that. I'm basically halfway between being a normal employee and a totally independent person. I get reimbursed for mileage and out of pocket costs, but I have no benefits and they don't take $$ out of my pay for taxes. I also get a different tax form for the first three months that just lists how much money I made.
I can probably get the accounts person at the new office to take an additional amount out of my check for the rest of the year to help make up the difference.
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Income tax for an independent contractor means you're your own business, so you fill out a schedule SE and schedule C, and it's 13% of your income after work deductions and expenses. If you use your car AT work (not to drive to work), IE you're driving while on the clock, if you keep written records of mileage you can deduct it on your schedule C. It's 55 cents a mile right now. There are other deductions, like if you have to buy equipment for your job, or supplies, keep receipts and you can deduct those as well. If you buy things to sell, you can deduct the cost of buying those things, but then you have to add the amount of profit you made from selling them. Ect Ect...
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I'm actually in a different category from that. I'm basically halfway between being a normal employee and a totally independent person. I get reimbursed for mileage and out of pocket costs, but I have no benefits and they don't take $$ out of my pay for taxes. I also get a different tax form for the first three months that just lists how much money I made.
I can probably get the accounts person at the new office to take an additional amount out of my check for the rest of the year to help make up the difference.
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