Hello

I am planning to go as a private contractor and one agency A is ready to pay $40 per hour. But the problem is they cannot process my H 1 sponsorship. I have found another agency B for my H1 sponsorship. How much taxes would agency B have to pay like payroll taxes and stuff. I am moving from Seattle, WA (no state Taxes) to Maryland (7% tax). I need to decide soon as to I want to make the move or not. I am getting paid $27 per hour right now. Assuming that Agency B keeps 10% of the hourly rate. Please Advise, any help is greatly appreciated.

Mehar

Mehar:

The employer's side of Social Security is 6.2% and Medicare is 1.45%. You also pay these percentages. The employer withholds these taxes from each paycheck, makes payments via deposits to Federal Reserve banks, and files a quarterly Employer Tax Return (Form 941).

There is also a requirement for unemployment taxes, about 0.5%, which the employer pays.

Since (I assume) you need someone to process the H-1 visa application as your sponsor, you must go with Agency B.

You may be able to also work for Agency A on the side, but I have seen postings in response to my tax advice stating that this is not permitted under the conditions of your visa (I am not an immigration attorney, so I cannot comment on the validity ofthose comments).

If you do work for Agency A, you will either need to have income taxes over-withheld from your Agency B paycheck, or you will need to make quarterly tax payments using Form 1040-ES. For every dollar over $400 earned as a private contractor, you must pay 15.3% in self-employement taxes. That is in addition to the federal and state income tax burden. That can add up very quickly and present a very nasty surprise come tax return time the following year, so make sure you put enough money put aside to pay this tax bill.

Hello ATE

Thanks once again. I think I got things a little bit confused here. I do not want to work for Company A and Company B simultaneously.

I will work for Company B (my H 1 sponsor) who in turn will sell my services to Company A. I Hope the scenario is more clearer now. Company A is going to pay Company B around $50 in Maryland. I was wondering how much money company B would charge me (for the Payroll Taxes and their commission) or how much of that $ 50 would I be receiving . I don't think this whole setup makes me as a private contractor?

Mehar

Mehar:

Based on your input, Company B is your employer, and they will pay you $27 per hour.

What they get from Company A for your hourly services is "nice to know", but really none of your concern, unless you want to use that information to negotiate a higher hourly wage from Company B.