So I finally asked for a raise. I work 32hrs/week and make $16/hr. I need a bit more to make ends meet.
They said ok, and offered me two choices:
1. Stay on as an employee and take $18/hr
2. Become a contractor (I already am telecommuting a fair amount) and take $20/hr
I'm single and live in California.
Feel free to give me a short answer, but if you have the patience to explain based on the below I appreciate it greatly.
I'm sure some of you see this as an obvious situation but I just can't get the taxes aspect sorted. This is my day job, but I'm a generally creative person who just gets really confused about what in the end happens with taxes.
Looking at a pay stub, as far as I can work out my current taxes being paid (I don't expect to owe taxes from experience in this sad bracket) is around 15-16%
What will I pay in taxes as a contractor at that rate and hours? This works out to a little less than $30,000/yr
(Let's just assume that I won't have a massive amount of deductions)
I know I need to pay taxes. Generally online from what I've read in the last few hours, people say to set aside 30%. By this calculation I would have, all told, LESS as a contractor making $20/hr than I would as an employee making $18/hr.
Doing my own calculations using turbotax and other calculators though tells a different story, that at that bracket I would pay a little less or about the same in taxes, and thus the higher hourly rate would work in my favor (obviously).
So, what is wrong with me, what am I missing?
•*"Self Employment Tax" covers Social Security/Medicare and is 15.3% Is that correct?
•*At that tax bracket will I NOT have standard deductions? Will I be paying Federal Income tax IN ADDITION TO the "Self Employment Tax?
•*Blerg. Confused.
They said ok, and offered me two choices:
1. Stay on as an employee and take $18/hr
2. Become a contractor (I already am telecommuting a fair amount) and take $20/hr
I'm single and live in California.
Feel free to give me a short answer, but if you have the patience to explain based on the below I appreciate it greatly.
I'm sure some of you see this as an obvious situation but I just can't get the taxes aspect sorted. This is my day job, but I'm a generally creative person who just gets really confused about what in the end happens with taxes.
Looking at a pay stub, as far as I can work out my current taxes being paid (I don't expect to owe taxes from experience in this sad bracket) is around 15-16%
What will I pay in taxes as a contractor at that rate and hours? This works out to a little less than $30,000/yr
(Let's just assume that I won't have a massive amount of deductions)
I know I need to pay taxes. Generally online from what I've read in the last few hours, people say to set aside 30%. By this calculation I would have, all told, LESS as a contractor making $20/hr than I would as an employee making $18/hr.
Doing my own calculations using turbotax and other calculators though tells a different story, that at that bracket I would pay a little less or about the same in taxes, and thus the higher hourly rate would work in my favor (obviously).
So, what is wrong with me, what am I missing?
•*"Self Employment Tax" covers Social Security/Medicare and is 15.3% Is that correct?
•*At that tax bracket will I NOT have standard deductions? Will I be paying Federal Income tax IN ADDITION TO the "Self Employment Tax?
•*Blerg. Confused.

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