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You're on the hook for income tax where I live regardless of whether you're contract or employee. I'm a contractor so my only additional cost is really health i
by DKnoll 8y ago
You're on the hook for income tax where I live regardless of whether you're contract or employee. I'm a contractor so my only additional cost is really health insurance (much cheaper in Canada since the basics are covered by the government, like $150/m for a good plan) and Quickbooks.
- froindt 8y agoYou are in the US as well. We have FICA (social security, medicaid, Medicare) of which half is paid by the employer and half employee. If you hear "self employment tax", that's typically referring to the fact that you're paying both sides (15.3% over 7.65%). There are a few more nuances, but that's the gist of it.
- DKnoll 8y agoThanks. The state (or most states) tacks some on as well, right? If I was not self-employed my employer/client and I would be paying into Employment Insurance and Canadian Pension plan as well, but I'm able to skip that as I own more than 20% (don't recall the exact percent they require for exemption) of the corp I work for. There is also 13% sales tax but I stack that on top of my hourly. I can claw back some of the sales tax by claiming the tax I paid on business expenses.
- froindt 8y agoOh yes, I was only covering federal taxes. To my knowledge, the general structure in most states doesn't matter. I don't know of any states where income taxes are partially paid by the employer and partially by the employee (like FICA).