Dear Fools:Recently I've started a job where I will be a contractor instead of a full-time employee. Now, in tax year 2000 what if any deductions can I have (considering I'm an individual not a D/B/A)?Second question: Taxes: I need to withhold 15% for FICA and what other taxes? Any references to pertinent tax reading material would greatly be appreciated. As always thanks for the help.Lucinda
Lucinda asks:Recently I've started a job where I will be a contractor instead of a full-time employee. Now, in tax year 2000 what if any deductions can I have (considering I'm an individual not a D/B/A)?I don't know what D/B/A stands for - but just for your general thought process: You have started a business - any valid business expense is deductible. I'd find an accountant - you are also your employer. I think we need to know - are you incorporated or anything or just working on a 1099 basis?Second question: Taxes: I need to withhold 15% for FICA and what other taxes?I'm organized as an S-Corp - so I'm my own W2 employee, I withhold:Federal Income TaxState Income Tax(if applicable)Local Income Tax(if applicable)Federal UnemploymentState UnemploymentSocial SecurityMedicareBased on your state, you may need: Workers Compensation Insurance(In PA, officers and directors who own their companies may opt out of workers comp, which I did).Any references to pertinent tax reading material would greatly be appreciated. As always thanks for the help.Check out the Self Employed Fools board. You may find others in your State, with your same business organization(sole prop, s-corp, c-corp, parternship, llc, whatever). As for handling all this withholding - I use PAYCHEX - so it costs me about $50 per month to pay myself - but they handle everything including quarterly tax filings and direct deposit.Helter
DBA stands for Doing Business As. An individual may be a DBA but actually any entity can use a DBA. DBAs usually have to be registered with the Secretary of State who keeps track of such things so everyone knows who is who and no two entities use the same DBA.Since Lucinda stated she was an individual contractor, she would have to pay estimated taxes of SET (Social Security and Medicare for self-employed) (15.3% of 92.35% of the net profits) and Federal Income Taxes based on her tax bracket. A reserve should be held in savings for State Income taxes as well depending on the State rate if she lives in a State with income taxes.
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