3 ms·

What “they say” is 75/hr, salary divided by 1000. I’m guessing you doubly applied the 2x factor.

mehrdadn 7y ago
May I ask how the calculation works? For $75/hr (to take California as an example) you have ~$105k after tax; subtract ~$5k for insurance and you're left with $100k. Whereas for $75k/year you're left with $56k/year after tax. Meaning that when you're on salary, you're pocketing 56% of the money you would as a freelancer. The only way I can make sense of this is if it's freelancers expect to bill around 25h/week... is that normal? And what happens if you have a job where both sides actually expect you're going to bill the full 40h? Is it normal for people to lower their rates in that case, or do they still base it on the 25h?
- deleted 7y ago
  [deleted]
- Gh0stRAT 7y ago
  Medical insurance is more like $1,600+/month for a married couple, even more if you have kids. That's ~$20k/year which brings you down to $85k after tax. And did you factor-in having to pay both halves of Social Security and Medicare? I believe that's another 15.3% [0] [0] https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/self-employment-taxes/a-freelancers-guide-to-taxes/amp/L6ACNfKVW https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/se...
  - mehrdadn 7y ago
    I just used this actually; I presume they included both halves of Medicare & Social Security: https://www.irscalculators.com/tax-calculator https://www.irscalculators.com/tax-calculator I was assuming single/young (so low-cost insurance), I wasn't really thinking of family/children but that's a good point!
- fullStackOasis 7y ago
  Your assuming that the freelancer is billing out 2000/year. That's not usual. Some freelancers can, but many cannot. The risk of long periods of downtime are bundled into that rate. Other expenses can be legal, own equipment, development, training, own office, etc. It depends on the freelancer's situation; you might wind up putting a lot of money back into the business. In that case, $75/hour is not really very much in the US.
  - mehrdadn 7y ago
    I see, thanks!

May I ask how the calculation works? For $75/hr (to take California as an example) you have ~$105k after tax; subtract ~$5k for insurance and you're left with $100k. Whereas for $75k/year you're left with $56k/year after tax. Meaning that when you're on salary, you're pocketing 56% of the money you would as a freelancer. The only way I can make sense of this is if it's freelancers expect to bill around 25h/week... is that normal? And what happens if you have a job where both sides actually expect you're going to bill the full 40h? Is it normal for people to lower their rates in that case, or do they still base it on the 25h?

deleted 7y ago
[deleted]
Gh0stRAT 7y ago
Medical insurance is more like $1,600+/month for a married couple, even more if you have kids. That's ~$20k/year which brings you down to $85k after tax. And did you factor-in having to pay both halves of Social Security and Medicare? I believe that's another 15.3% [0] [0] https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/self-employment-taxes/a-freelancers-guide-to-taxes/amp/L6ACNfKVW https://www.google.com/amp/s/turbotax.intuit.com/tax-tips/se...
- mehrdadn 7y ago
  I just used this actually; I presume they included both halves of Medicare & Social Security: https://www.irscalculators.com/tax-calculator https://www.irscalculators.com/tax-calculator I was assuming single/young (so low-cost insurance), I wasn't really thinking of family/children but that's a good point!
fullStackOasis 7y ago
Your assuming that the freelancer is billing out 2000/year. That's not usual. Some freelancers can, but many cannot. The risk of long periods of downtime are bundled into that rate. Other expenses can be legal, own equipment, development, training, own office, etc. It depends on the freelancer's situation; you might wind up putting a lot of money back into the business. In that case, $75/hour is not really very much in the US.
- mehrdadn 7y ago
  I see, thanks!