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Re: OT: going to contracting on 1099....any advise? Posted by Justin VanAbrahams [Email]  (#32) [Profile/Gallery]
(more from Justin VanAbrahams) on Mon, 17 Sep 2007 13:03:42
In Reply to: OT: going to contracting on 1099....any advise?, Tarheel, Mon, 17 Sep 2007 12:50:18 Members do not see ads below this line. - Help Keep This Site Online - Signup |
Make twice as much money, that's my advice. When your employer isn't paying half of your taxes, Uncle Sam takes a much bigger bite out of your wallet. Be prepared for that! Be SURE you're either paying quarterly taxes, or socking money away regularly. The next tax year can really hurt when you owe 40%+ of your earnings to the government, plus penalties.
Deductions are a big bonus, but there are specific rules which govern what mileage can and cannot be deducted. I am probably wrong about this, but my recollection (from a long time ago) is that you cannot deduct mileage from your house to your primary job site - if you go elsewhere, that mileage is deductible, but your commute is not.
If you can deduct, you have a choice of the Federal rate ($0.48 I think) or "actual costs" (fuel, tires, repair, etc.). You cannot do both. And, since it looks like you've only got one Saab (what's wrong with you?? :) you will have to determine what portion of your mileage is work related, and deduct only that percentage of your total bills. IME, it's always been more money back in my pocket taking the Federal rate and keeping a log of miles driven for work. Perhaps if your car is abnormally expensive to maintain or not reliable the itemized deductions are worthwhile, but my Saabs have always been terrifically economical to drive. Back in the day, I'd drive 30,000-40,000 miles per year at about $0.25 per mile, and rack up *maybe* $2000 in actual costs - YMMV, but I was "making" money on the deal! :) Thank God for all those contractors and their 8mpg 3/4 ton work trucks!
posted by 207.15.18...
, Tue, 18 Sep 2007 11:30:54, Mon, 17 Sep 2007 13:03:42 <-- Viewing This Message
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