Working contract

By Jordan123456 Date 01-22-2013 15:07

I've never worked contract for a whole year. I was wondering what will taxes be like. i did buy property and truck this year. I worked 6/7 days a week all year except normal Holidays.. Just a rough number would be helpful obviously we r welders not a CPA.. I'm makin 90$ a hr on avg 12 hr days

By OBEWAN

Date 01-22-2013 15:22

I figure at least an extra 15% of my take for 1099 work is required to cover my "self employment" taxes.

But, the great thing is (I think), when you have your own business, you get to deduct all the expenses on a seperate form, and it is not like the $5700/itemized limit requirement for a 1040.

So, you really will need accurate records of all expenses to max out your deductions. And, I would say pay something each quarter to avoid a penalty at the end of year if you might owe $1000 or more.

I am no expert on this though. I use TurboTax myself, but a good accountant can offer a lot of help if you are willing to shell out the cash for them.

By Jordan123456 Date 01-22-2013 18:37

Thank you

By OBEWAN

Date 01-22-2013 19:24

I hope that gives you a rough idea. I have never billed anything even close to $90 an hour. But you should have a large deduction, so it should be less than $90 net.

By rough number with the 15% I meant added to regular 1040 style taxes. So, if you are in the 25% bracket, you would pay 40% before deductions, or maybe less than 40% after deductions.

I have never paid any quarterly taxes though. If you Google for quarterly tax payments you will see the official IRS.gov site explaining the procedure. It can all be done online direct from any checking account.

This could be my first year as a 1099 contractor, so I have been doing a lot of research myself on this. I have worked W2 contracts for the last 3 years, and my employers always paid for my taxes and gave me per diem so I did not get to write off any expenses of my own...