How Much Deducted?

Discussion in 'Homesteading Questions' started by milkinpigs, Jun 20, 2006.

  1. milkinpigs

    milkinpigs Dairy/Hog Farmer

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    I'm self-employed , so I need to ask you folks. If I pay someone $8.00 an hour, how much would be left after fed tax and FICA> Here in Texas we don't have state income tax.
     
  2. TxCloverAngel

    TxCloverAngel Happiness is Homemade

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    hmmm There is a web site.. I'm thanking its the state comptrollers web site that tells you exactly what percentages to withhold. I'll try to find it.

    If all else fails, call a CPA.
    ask about your quarterly 940 you'll have to file to pay the gov those with holdings. ooh its fun lol

    You match the SS with holdings and the medicare with holdings. so it will cost you too.
     

  3. TxCloverAngel

    TxCloverAngel Happiness is Homemade

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    oops scratch the state comptrollers office, thats sales tax. call a CPA or look at IRS.gov for 940 and with holdings.
     
  4. Clifford

    Clifford Love it, or leave it...

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    If you are self employed (and a responsible taxpayer), why would be willing to ask tax advise (legal advise) from non-CPA/Attorney? You are legally liable to pay whatever the statutes call for. Ask a professional, so your butt is not left swinging in the wind...
     
  5. milkinpigs

    milkinpigs Dairy/Hog Farmer

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    Because Cliff, there are cpa's formerIRS employees and attorneys here, was just doing some thinking out loud and lots of folks here with all kind of knowledge and experiences. When I have something on paper ,I'll go to myCPA and have it taken care of. If I ever need to know about staying home, Ill get in touch with you first thing, you seem like a very intelligent gentleman. Thank you very much for your opinion.
     
  6. milkinpigs

    milkinpigs Dairy/Hog Farmer

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    Thanks Angel, lol......think I'll just do the work myself,lol
     
  7. Spinner

    Spinner Well-Known Member

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    Why would you want to pay those extra taxes? When I need work done I hire them as a independent contractor so they pay their own taxes. It gives me a better deduction rate, and relieves me of the extra burdon of withholding.

    If you decide to go that route, contact a good CPA so you are sure to do it legally.

    edited to change "subcontractor" to "independent contractor". There is a difference between an independent contractor and a sub contractor. I used subcontractors when I had contracts to provide work for others. I hire independent contractors to do work for me when I have jobs that need to be on my property.
     
  8. oldmanriver

    oldmanriver Well-Known Member

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    Tell me how you found someone that would work period......
     
  9. TxCloverAngel

    TxCloverAngel Happiness is Homemade

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    you know ...
    a very good point was made.
    I would seriously think about NOT hiring any employee. I would pay them as an independent contractor. That way you are NOT liable for any with holdings at all. you just need to keep record of what you paid them & when. so at the end of the year you can send them a 1099. (Same thing you should do for lets say a babysitter) they will be liable for any and all with holdings. and you wont have to pay employer portions of SS and Medicare.
    I was sooo happy when I went w/ Independent contractors instead of employees. You also save yourself LOTS of liability for workman's comp etc etc etc..
    if there is any way you can go independent contractor do it!!!
    do a search online (IRS.GOV for a form 1099) its the way to go!

    still looking for that web page tho.
     
  10. Queen Bee

    Queen Bee Well-Known Member Supporter

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    If the person is an Independent Contractor (at least in NC) you are not responsible for their taxes, or other withholdings. If you are unsure about any matters about taxes and withholdings --call a CPA.
     
  11. Spinner

    Spinner Well-Known Member

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    I made flyers on my computer, something along the lines of "need someone to build fence", or need "fence-row cleaned out". I put my name and phone # on the flyers, put them up around the local stores (mostly feed stores), and wait for someone to call. At least that's how I started out, now I have a list of people to call when I have a job that needs done.

    I pay by the job, not by the hour. The agreement is they get paid when the job is done, so they usually jump in and work hard until it's finished. Sometimes a man and son team show up, sometimes a few high school boys wanting to make a few extra bucks, it usually works out well for me and them.

    I have them sign a contract stating that they are working as a contractor, and are not my employees. I'm careful to follow the gov contractor rules so I don't get in trouble.

    I see it as one of those "everyone wins" situations.
     
  12. RobinAnn

    RobinAnn Well-Known Member

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    If anyone is curious about withholding amounts, check out www.paycheckcity.com and look under "personal calculators"
     
  13. countrygurl

    countrygurl Well-Known Member

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    here it goes my 2 cents worth, as mention already pay them by the job get there personal info up front name, address and most important ss # irs has the form cant remember the form number but itis called "request for taxpayer ID number" basically an independant contractor is someone who 1. set his own hours 2. works under their own direction, so hired them by the job. play it safe and outline the job description and who supplies what and expected completion date. have them sign it. from my understanding you can not deduct expenses on your own personal property, you can it you claim your farm as income like a business. you can claim expenses on rental propertry you own. if you are self employed and you hire someone to do a job as a subcontractor the $ you pay them comes off the top of you gross income. but you have to send them a 1099 for any reported income over(Ii think it is $400) for the year. just like you deduct other business expenses.
    so you pay less self employent taxes and federal taxes.

    get a good cpa/accountant so your bottom line is low as legally possible because that 14% selfemployment tax hurts
     
  14. michiganfarmer

    michiganfarmer Max Supporter

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    exactly what I was thinking
     
  15. milkinpigs

    milkinpigs Dairy/Hog Farmer

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    Thanks folks.....lotta smart people here!!!!!
     
  16. frugalville

    frugalville Well-Known Member

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    One last note on hiring subs instead of hiring an employee. If you hire a subcontractor, that makes you the general contractor. It is your responsibility to confirm that the subcontractor carries/has liability insurance. IF they don't and you hire them, then they get killed/injured on your job... you better have a good attorney.

    If said contractor fires a nailgun thru his foot on your property, you better have something in your hand that shows he is in fact a sub-contractor, and not just a guy you were paying $8.00 an hour cash. (remember, he could change his story in court.)

    The reason the sub issue is always appealing is because of the liability costs/insurance and self-employment tax.

    When I built my house, I had the same issue. I did not want to open a company to carry insurance, so I just added a rider temporarily to my homeowners policy... just to cover my butt.

    Good luck.
     
  17. happycat

    happycat Well-Known Member

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    The "request for taxpayer ID" is a form W-9. It's available on the IRS' website here http://www.irs.gov/pub/irs-pdf/fw9.pdf?portlet=3

    Current regulations state that 1099-Misc must be issued to anyone paid $600 or more during a calendar year for services; however if the recepient is a corporation they are exempt from receiving that 1099 (there are some other rules too; again the IRS website has some good information).

    I think it's a very good idea to have your worker sign a contract, even a brief one, outlining the terms of your working relationship.

    *edited for spelling :) *
     
  18. Macybaby

    Macybaby I love South Dakota Supporter

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    Just a word of warning, if you "hire" someone and call them an independent contractor, make SURE they meet the requirements the IRS has set up for a person to be considered one.

    Does not matter what the "employee" signs, it matters what they are doing and what the job duties (not description) are.

    Cathy
     
  19. Spinner

    Spinner Well-Known Member

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    Yep, that's where many people make their mistake.

    You can tell them what you want done (job description),
    you can give them a time that it must be completed by (completion date),
    you can supply materials or require they use the materials you specify (brand names, sizes, colors, length from post to post in the fence, etc.) (project plan),
    you can check on their progress, (project inspections)

    A big problem most people have is that you can NOT tell a contractor what time to work. If you tell them to be on the job at 7 AM and work till 5 PM then you have just turned them into an employee instead of a contractor. There are some fine lines that you must not cross, but it's worth the trouble it takes to learn the rules because it can save you money and headaches when it comes tax time.

    The contract makes a paper trail in case they come back later and claim they were an employee. You never know when someone might file for unemployment or something and list you as a former employer. :nono: