A community of 30,000 US Transcriptionist serving Medical Transcription Industry

Taxes!!! - I am dying here...

Posted: Jun 14, 2011

I am an IC and am being choked by self-employment taxes. It seems like I work to pay the taxes. Anyone have any tax advice? Does anyone else feel this way?

I'm in the same boat - PayTheMan

[ In Reply To ..]
My taxes are close to $8k a year. I have no hope of ever buying anything new ever again..no new car, house, furniture..or pay for college for my kid.

I hear ya - I am dying here...

[ In Reply To ..]
I have been contemplating going out to get a job, but then I would have to pay daycare and would be giving up time with my kids. A rock in a hard place! Scanning for new jobs with employee status, but very apprehensive about jumping ship.

I'm an employee and I'd be thrilled if my taxes were only 8K a year. - nm

[ In Reply To ..]
nm

Self employment taxes - sm

[ In Reply To ..]
This is a misconception, because the taxes work out to be equivalent regardless of whether you're an employee or an IC, it's just handled in different ways.

With an employee position, the employer pays half, but they also pay you less overall per line to make up for that.

As an IC, its true that you also pay the employer's half, but then that half that you pay subsequently becomes a a full deduction for you on your 1040 form.

So it's really 6 of one, half dozen of the other, works out the same either way in the end.

Plus, you have deductions for energy costs, - anon

[ In Reply To ..]
internet/phone, equipment, office space, office supplies, etc. If you are diligent about putting a percentage aside into an account just for taxes, it shouldn't be a problem. My STATE taxes are a bigger rip-off than self-employment tax is.

not 6:1 - PayTheMan

[ In Reply To ..]
For last year, the SE tax went on the form at 6k and came off at 4k, leaving me to pay the balance of 2k. Not 6 of one, half dozen of the other at all.

Unless I am claiming HI premiums, the routine deductions of internet, home use, electricity, etc., is a drop in the bucket.

BTW, the 8k was for Fed only. I pay another 4k in state taxes.

PayTheMan - Old Pro

[ In Reply To ..]
Yep, I pay a boatload in taxes, too. I have one of California's top accounting firms, we take all of the deductions we are legally entitled to, and we still end up paying, paying, paying......I feel your pain.

Yes it is 6:1 - sm

[ In Reply To ..]
As an employee, you pay your 1/2 and your employer pays the other half.

As an IC, you are responsible for paying both halves, but then you deduct the "employer's half" in full off your gross income.

The end result is that both an employee and an IC pay for "their" half (nobody gets out of that one). Then, the IC also pays the "employer's half," but this is then allowed to be deducted in full on Form 1040. The actual dollar amount paid will work out the same for an employee and IC who make equivalent gross income. The only difference is in exactly how it is handled, the paperwork for the IC is different.

You must make A LOT of money - mt

[ In Reply To ..]
I have been an IC for almost 10 years and have never had taxes like that! As long as you set aside at least 25% of your paycheck in a savings that you don't touch, you should be okay. But if you are making enough money to put out that kind of cash in taxes, you may need to start paying quarterly. You may be getting penalized for not paying as you go, which is really how the tax system is set up. Those penalties add up really fast.

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