Independent contractor tax questions

[rachelhav]

I will be finishing my "regular" job at the end of this month, and starting work as an independent contractor in the beginning of June. I'm aware that I need to set aside money for taxes, but all the info out there is overwhelming. There's federal...there's state...there's "self-employed tax"...different percentages and brackets. I'm really confused!!!

Basically I just want to know what overall percentage to set aside out of what I get paid. I'm sure it's not as simple as that, but a girl can dream.

Can anyone point me in the right direction as to where to find out what I need to be setting aside? I would love to hear from anyone who knows what they're doing, especially anyone who lives in the state of Virginia...feel free to answer here or PM me. I'd really appreciate the help!

Thanks,
Rachel

[wahpro]

I have worked from home as an Independent Contractor most my life and there is no exact amount to set aside as it depends on many factors.

You will be able to write off many things such as part of the costs of your utilities, rent and many others depending on how large of an area your home office is and if you use it regularly to conduct business.

You can also write off things such as ink for your printer, paper, office equipment etc. if it is required to do your work.

The best thing to do is meet with a tax consultant and they will be able to give you a good idea as to how much you should set aside each month or quarterly so that you do not get hit up with a big bill at the end of the year.

Good luck to you!

[msuggitt]

I agree that it's best to consult a tax consultant. But if you don't have one or want to study up for yourself, then I'd suggest going straight to the IRS.gov site so you are getting the information 'straight from the horses mouth'.

The SBA.gov site was also set up to assist those going into business for themselves or starting up a small business. (corp, llc, self proprietor)

[ccorrente]

I am a Realtor which is an independent contractor position plus I have my own Personal Coaching Business. This tax issue question is a very good one, however there is not an easy answer. What ends up happening is you do get to deduct all your expenses that you have related to your "job" or business. Then you deduct that from your gross amount that you were paid. That amount is what you will be taxed on. If you are married then that amount gets added to your spouses taxable income. Then depending on what state you live in, you will have those taxes to consider. I live in Florida so we do not have any other income taxes here besides the Federal so mine is easier. Wish I had a better answer for you. I can tell you to keep all your receipts for anything you by or pay out that this related to your job.

[msuggitt]

"Tax Deductions" are like music to my ears every year.

[Cornelius]

Considering the OP asked this question I assume it's ok to offer an option. Get a LegalShield membership along with a small business plan and get your business tax questions answered. For marketing and other concerns add on a go small biz plan. When in business there is a cost to be in business. What state are you in?