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    lorealusa's Avatar
    lorealusa Posts: 1, Reputation: 1
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    #1

    Jan 19, 2008, 09:31 AM
    Tax rate for independent contractors
    I am starting a job as an independent contractor and would like to know how much I should put asaide for taxes.
    Fr_Chuck's Avatar
    Fr_Chuck Posts: 81,301, Reputation: 7692
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    #2

    Jan 19, 2008, 10:12 AM
    As a start:

    15 percent for yourself employment taxes and @ 15 ( depends on your tax rate) percent for your federal income taxes and then the amount of your state tax. So you should be close if you keep 30 to 40 percent for taxes out of income on self employment.
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
    Senior Tax Expert
    		  
    #3

    Jan 19, 2008, 12:31 PM
    Agreed. You need to bank about 35 cents for every dollar made to cover the tax bill come April 15th.
    MukatA's Avatar
    MukatA Posts: 7,110, Reputation: 176
    Tax Expert
    		  
    #4

    Jan 19, 2008, 10:40 PM
    Quote Originally Posted by lorealusa
    I am starting a job as an independant contractor and would like to know how much I should put asaide for taxes.
    As an independent contractor, you will need to file Schedule C (Form 1040): Profit and Loss from Business (Sole Proprietorship). On schedule C you will report your income and deduct your business related expenses.

    On your net income from self-employment (that is from schedule C) you pay 15.3% employment taxes. For this you use schedule SE (Form 1040). Then the income will be taxed as ordinary income. File your tax return before April 15, 2008.

    Also for your 2008 income, you may need to make estimated tax payments. The first payment for 2008 is due on April 15, 2008, which can be one-fourth of your tax on your 2007 Form 1040
    AtlantaTaxExpert's Avatar
    AtlantaTaxExpert Posts: 21,836, Reputation: 846
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    #5

    Jan 19, 2008, 10:55 PM
    Good post my MukatA.
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