Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Author: horlander One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121114  
Subject: Fed. & SS taxes on consultant pay Date: 12/7/2000 3:08 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I am considering doing some work on the side for someone who is not my employer. They want to pay me as a consultant and not take any taxes out of my check. Does this mean that I am not only responsible for paying the income tax, but also both portions of social security for this work? Since I am not actually in business for myself would this second employer still be responsible for part of my SS tax? Am I aasking the right questions?

Thanks!
Print the post Back To Top
Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42618 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 5:10 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
I am considering doing some work on the side for someone who is not my employer. They want to pay me as a consultant and not take any taxes out of my check. Does this mean that I am not only responsible for paying the income tax, but also both portions of social security for this work? Since I am not actually in business for myself would this second employer still be responsible for part of my SS tax? Am I aasking the right questions?

You're asking the right questions, but not using the correct terms. You may not think of yourself as being "in business," but you are in this situation. You'll report your earnings and expenses on Schedule C, and your net income will be subject to self-employment tax, all of which you pay. The person engaging your services is not your "employer," which is a term of art.

TMF ExRO
Phil Marti

Print the post Back To Top
Author: horlander One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42619 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 5:34 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
"self-employment tax"

Does this just mean I pay what I would normally think of as my part and my employer's part of ss/med? Or is there an additional "tax"?

Print the post Back To Top
Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42621 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 5:45 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
self-employment tax"

Does this just mean I pay what I would normally think of as my part and my employer's part of ss/med?


Right. The bottom line from Schedule C flows to Schedule SE, where you compute the tax. You do get an adjustment to income (no need to itemize) for part of the self-employment tax.

It's all covered in the 1040 instructions.

TMF ExRO
Phil Marti

Print the post Back To Top
Author: horlander One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42622 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 5:58 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 0
If this additional income puts me over the SS income cap (or if I was over to start with) would I only have to pay the medicare(?) part of it?

Thanks TMFExRo!

By the way - what does your name mean?

Print the post Back To Top
Author: Crosenfield Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42623 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 6:55 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
If you have a regular job and you and your regular employer pay the annual max in social security, then you only have to worry about medicare tax and your regular income tax on your "consultant" job. Actually to have benefits from the regular job and use your vacation to take a "consultant" job is a nice way to do things. You can, if you wish, establish a SEP IRA and put 15% of self-employment earnings after expenses into it, inaddition to any 401k you might have at your regular job.
If you do very much of the "consulting" you may need to either increase your withholding or pay quarterly installments on your income tax.
Best wishes, Chris

Print the post Back To Top
Author: TMFExRO Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 42631 of 121114
Subject: Re: Fed. & SS taxes on consultant pay Date: 12/7/2000 11:02 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
By the way - what does your name mean?

"Ex" as in former; "RO" as in revenue officer.

Back before I had a TMF persona and they shot Mr. Lincoln, I took someone to task for calling a revenue officer a revenue agent. (R/O's collect; R/A's audit)

When it came time for me to choose a TMF name, TMF Taxes suggested TMF ExRO, I liked it, et voila!

TMF ExRO
Phil Marti

Print the post Back To Top
UnThreaded | Threaded | Whole Thread (7) | Ignore Thread Prev Thread | Next Thread
Advertisement