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Re: CORRECTIONS RE: QUESTION: W-2 vs. 1099 Hourly Rates
Subject:Re: CORRECTIONS RE: QUESTION: W-2 vs. 1099 Hourly Rates From:Michele Edson <M-E -at- IX -dot- NETCOM -dot- COM> Date:Wed, 24 Dec 1997 21:02:15 -0800
Hi I was just cleaning up my mail and saw this reply, whereas I did not
see the original question... so sorry if my response doesn't match the
question...but the answer doesn't seem to be a right answer to any
When you are paid on a 1099, you must complete form SE where you are
taxed accordingly ... which is approximately double what you would pay
as an employee).... on the 1040 you subtract 50% of this amount on line
25... so basically this is almost a wash when you compare what you pay
as a business (1099) and what is deducted from your paycheck as an
Specifically, for 1996 - you multiple net earnings by 92.35% and then
multiple that amount (or no more than $62,700) times 15.3%. You then
get to deduct 50% on the 1040. For amounts over $62,700, you are taxed
at 2.9% (of the 92.35)...
So there is should be no significant difference between W2 and 1099
hourly rates BASED ON SS/MEDICARE TAXES.
For further reading, try the IRS pub for small business..
Signed... a tech writer and latent tax specialist.
Wilcox, John (WWC, Contractor) wrote:
> From: Wilcox, John (WWC, Contractor)
> Now it's an exact company match on both the
> FICA and Medicare. So now it's
> 6.2% your share of FICA
> 6.2% what should have been the company's share of FICA
> 1.45% Medicare
> 1.45% what should have been the company's share of Medicare
> John Wilcox, Documentation Specialist
> Timberlands Information Services, Application Delivery Group
> Weyerhaeuser, WWC 2E2, Box 2999
> Tacoma, WA 98477-2999 USA
> 253-924-7972 mailto:wilcoxj -at- wdni -dot- com
> (I don't speak for Weyerhaeuser, and they return the favor.)