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? ABOUT PAYING TAXES AS AN IC VS. AN MTSO EMPLOYEE. - FUTURE MT

Posted: Jul 29, 2011

I am trying to decide whether to work as an MTSO employee or an IC. If I choose IC, what percentage of self-employment, FICA, Social Security, and Medicare taxes will I be paying on (on the average) on my gross monthly income?

I know that ICs make more cpl, but will the taxes I pay be more and, therefore, not worth it?

Your input would be greatly appreciated!

about 35% - nm

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x

25% - mt2

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And if you have a spouse who is paying taxes, unless you're earning huge amounts, you could do less.

15% self-employment tax alone, looks like ICs are no longer making much more - pay down to 8 cpl or less

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I pay 40% for fed and state - NM

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Future MT - Old Pro

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May I make a suggestion? The smartest thing you can do is to schedule an hour with a CPA. Pay him or her for their time and have a list of questions ready to go. The CPA can explain the benefits of each classification, as well as the obligations of each. It is the best investment you will ever make. Good luck!

10.4% for Social Security and 2.9% for Medicare in 2011 (sm) - KLil

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That is your self-employment tax. The Social Security tax was lowered 2% the first of this year since they are doing away with the pays to work credit. If you are an employee, you pay half of that by payroll deductions and your employer pays the other half. The actual tax you pay on your income would depend on your filing status and deductions.

The MTSO pays half SS and Medicare, which is 15%, so they will pay 6.5% - and you will pay

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6.5% when an employee. As an IC, you will pay the whole 15% (self-employment tax), plus you have your state and fed taxes to take care of. So the person above has figured 15% SI tax and 25% for state and federal making it 40% for taxes as an IC. Don't forget as an IC you also get to withhold various things for your taxes.

sorry, 7.5% not 6.5% - my bad

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Taxes - Trans

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The thing to remember is your employer contributes only one-half of your social security tax (7.5%) All other taxes are paid by the employee whether you are an employee or an IC.

IMO - Not worth it - anon

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It is a nightmare dealing with the IRS and SE taxes. I hate it. I would love to get out of the IC game but haven't been able to find an MTSO with enough work to get out of the IC game.

This industry is soul crushing at the moment. In my humble opinion

I agree, struggling to make the mortgage and feed 2 kids with no work - ready to get out of it altogether

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IC versus employee - Employee better but..

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I am doing both. I am not making any money as an employee but need what little benefits there are. I am making more money as an IC and being kept very busy working. As an IC I am not waiting for the work which is what I need to pay the bills. MTSO's overhire for accounts, which means little work and no money to pay the bills.

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