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Tax implications for being paid on a 1099 (All Inclusive) basis

What are the tax implications for being paid on a 1099 (All Inclusive) basis?

Does this mean that I as the employee will have to pay both my share as well as the employer's share of the social security tax?

Are there any other additional or higher taxes that have to be paid by me while being paid on a 1099 basis as opposed to a W2 basis?
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Knowledgeable
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1 Solution
 
John HurstBusiness Consultant (Owner)Commented:
If you are self-employed, you have to pay both shares (employer and employee). I have to do that myself here as well.
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fred hakimRetired ITCommented:
You pay all the taxes.  Including the fix a and social security.  Note if it's over a certain amount per quarter you need to make those quietly payments as you go.
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fred hakimRetired ITCommented:
That should be FICA not fix.  Sorry, fat fingers, skinny phone that thinks it's smarter than me.
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Dave BaldwinFixer of ProblemsCommented:
It's all on you.  But then, so are all the deductions for related business expenses.  I have a tax person that has been taking care of all that for me for over 20 years.
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John HurstBusiness Consultant (Owner)Commented:
Where I am, the person pays the personal taxes, not the business. The total salary the business pays is, of course, fully deductible.
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KnowledgeableNetwork EngineerAuthor Commented:
Can anyone provide me with a complete list of all of the taxes I will be paying on a 1099 (All Inclusive) basis including how much each tax is (percentage wise)?
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Dave BaldwinFixer of ProblemsCommented:
No.  We would have to know all of your financial details to do that.  You don't pay taxes directly on a 1099.  If you are filing as a business, that starts as business income and business expenses are deducted.  Then what ever remains is added to the other income you have on your state and federal tax forms.
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Colleen Kayter4D AssetsCommented:
If your "employer" says they will pay you "on a 1099," that means you're an independent contractor and they are your client, not your employer. According to the Dept of Labor, that means they cannot tell you when (timeclock, scheduled hours), where (location), or how (step-by-step procedures) to do the work you perform for them.

You are self-employed, both employer and employee. As Dave Baldwin mentioned, you do get to deduct expenses. e.g, if you use an area of your home exclusively for work, you can deduct a portion of your rent/mortgage and utilities. The taxes you pay are based on your net (after expenses have been deducted) income.

The IRS has very detailed instructions about calculating your taxes, but this WikiHow page gives you the nutshell version. http://www.wikihow.com/Calculate-Self-Employment-Tax-in-the-U.S.

This webpage can also answer a lot of your questions: https://www.irs.gov/individuals/self-employed

The only set amounts are employee deductions (if you are an employee):

Social Security: 6.2% of < $127,200 income, no additional for amts over that.
Medicare (FICA): 1.45% of < $200,000 income, 0.9% for amts over $200K, no employer match

So, that is 7.65% for the employee (you) + 7.65% for the employer (you) = 15.3% of your net (after expenses) income
up to $127,200. If you're making more, hire an accountant.

That does not include your federal or state income tax obligation which is based on your estimated annual income.

ADP provides quick references of payroll taxes for every state. Remember you are both employee and employer, so where the item states "employer/employee," double that amount.

https://www.adp.com/tools-and-resources/compliance-connection/state-taxes/2017-fast-wage-and-tax-facts.aspx
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