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Starting job in July that is 1099 instead of W2. What should I be saving?
Posted on 6/18/16 at 11:13 am
Posted on 6/18/16 at 11:13 am
Starting a job in IT Security (Penetration Testing for SCADA & industrial control systems, mainly) on July 1st. Small company with <5 guys, and as far as I know, all of the other guys have their own LLCs. Been reading about the implications of 1099s and this shite is stressing me out.
What should I be saving per month for the quarterly tax payments? Is 30% about right? Single, no dependents, etc. I'll in Houston, so no state income tax. I'm just gonna hire a CPA to do all this shite once I get settled in, but I'd still like to have a ballpark percentage going in.
From what I've gathered, I definitely need to get an LLC w/ S election down the road, but I need to make sure this company/industry are the right fit for me, first. Don't want to dive in head-first.
Any advice would be greatly appreciated
What should I be saving per month for the quarterly tax payments? Is 30% about right? Single, no dependents, etc. I'll in Houston, so no state income tax. I'm just gonna hire a CPA to do all this shite once I get settled in, but I'd still like to have a ballpark percentage going in.
From what I've gathered, I definitely need to get an LLC w/ S election down the road, but I need to make sure this company/industry are the right fit for me, first. Don't want to dive in head-first.
Any advice would be greatly appreciated
8
Posted on 6/18/16 at 12:02 pm to Carson123987
Highly recommend a CPA. Keep track of all your bills, meal receipts, mileage, any expenses you can relate to your job to write off. If no state income tax than I would think 25% should do it, but do 30% if that makes you feel better.
Also, most importantly, open up a separate savings account and put that 25% straight in there and forget about it. Makes it very easy to ignore that money and not get tempted to use it for something.
Also, most importantly, open up a separate savings account and put that 25% straight in there and forget about it. Makes it very easy to ignore that money and not get tempted to use it for something.
This post was edited on 6/18/16 at 12:03 pm
Posted on 6/18/16 at 12:20 pm to Carson123987
quote:
What should I be saving per month for the quarterly tax payments? Is 30% about right? Single, no dependents, etc. I'll in Houston, so no state income tax. I'm just gonna hire a CPA to do all this shite once I get settled in, but I'd still like to have a ballpark percentage going in.
Your OASDI/Medicare is going to be 15% off the top, so that's your starting point. I might even go 35% depending on your gross. You'll know a lot more after you pay that first quarterly bill.
quote:
I'm just gonna hire a CPA to do all this shite once I get settled in, but I'd still like to have a ballpark percentage going in.
quote:
rom what I've gathered, I definitely need to get an LLC w/ S election down the road,
This cannot be done soon enough. I see you're starting this situation in July and you want to wait, but you're only asking for trouble down the line to convert your operations. If you "dive in" and wait, I would set a hard deadline for yourself to have it done and ready to convert NLT 1 January.
This post was edited on 6/18/16 at 12:22 pm
Posted on 6/18/16 at 12:28 pm to Carson123987
Half
Posted on 6/18/16 at 1:05 pm to Carson123987
Any business expense deduction will save you lots of money. That is key. Will you be driving anywhere besides to the office?
Posted on 6/18/16 at 1:49 pm to Carson123987
You can put 20% or so after certain expenses, self employment tax, etc, into a SEP-IRA.
As others have said, self employment tax is both parts of social security tax.
So if your, "net profit is 20,000 you an put 4,000 in a SEP. My CPA does all my calculations. I can't remember whether it is 25% or 20%.
As others have said, self employment tax is both parts of social security tax.
So if your, "net profit is 20,000 you an put 4,000 in a SEP. My CPA does all my calculations. I can't remember whether it is 25% or 20%.
Posted on 6/18/16 at 5:51 pm to Carson123987
Is the company you working for setting your time? I bet they are illegally 1099ing you to save 12.5%. If they don't pass the 20 question contractor quiz, then they need to w2 you instead.
Posted on 6/19/16 at 8:16 pm to Carson123987
1099 for a entry level position where you wont be making much money? sounds like you are getting screwed.
scada/automation is a great field to get in, not so sure about the pen side. just remember anything siemens is easily hacked.
scada/automation is a great field to get in, not so sure about the pen side. just remember anything siemens is easily hacked.
Posted on 6/19/16 at 8:36 pm to Carson123987
You can write a bunch off but you are still going to get screwed. I was 1099 in 13 and 14. In 14 I had my s Corp set up and wrote off almost 100k in stuff. My taxable income was 155 and I paid the Feds 47k. Every year I have been a w2 employee I've always done my taxes myself and never paid over 15%.
Tldr- you gonna get raped
Tldr- you gonna get raped
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