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What % of my income should I assume will need to pay for taxes as an independant contractor?
I just need a ball park % of what I should asume I will pay out of what I make (i.e. social security % of X amount I make, medicare % of X amount I make). Also, what else am i missing? (i.e. federal, local)? Thanks!
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- Self-employment tax is roughly 15% of your profit. (income less expenses of doing business). Then you have federal income tax. That's a sliding scale, based on the amount you earn and your filing status. (single, married, etc.). Total income for the year, less personal exemptions and standard deduction) You might have state and city taxes, and you might not - depends on where you live. Not all have income taxes. If you make more than $50,000 profit, taxes, including self-employment tax, and all the others, could be 50%. If you make less than $30,000, and live in a non-taxing municipality and state, the total could be as little as 15% if you have a bunch of kids, say, and end up paying no income tax, just the self-employment tax. My husband is self-employed. We're about a 15% tax bracket for income tax, and 2% for city, so I set aside about 35% of his profits for tax purposes.
- Read about self employed (or independent contractor) tax filing and payment of estimated taxes: http://taxipay.blogspot.com/2008/04/tax-filing-by-self-employed-sole.html
