Can I use turbo tax to campare tax burden between weather to stay an employee or be a contractor. can I use Turbo Tax to compare and how?

[Critter]

The main difference is the FICA taxes ... right now you pay 7.65% and as a contractor you will pay twice that or 15.3% however as a sub you can deduct any business expenses first before you are taxed so you can save some taxes that way.  BUTTTTT ... what concerns me the most is if the employer has the right to stop calling you an employee at all ... if you will do the exact same job as a contractor just without the paycheck then that is illegal.  If they do this the employer would save on taxes, workman's comp, vacation & sick time ... so they get all the benefits and you would lose.

[SweetieJean]

Excellent points.

[SweetieJean]

If you are an independent contractor, the boss would not need to provide you with unemployment comp insurance or health insurance either.

[Billycla]

Thanks, understand your point. More info. I drive a long haul truck. If I buy my own truck and work as a contractor my est cost of running truck, health ins and such with increase pay per mile I would end up with higher income but on the conservative side saying about the same personal yearly earnings. With the new tax laws per deim can’t be claimed with W-2 but can be with 1099. So being on road 280 days a year that would make $15,000 of non taxable income. So I’m trying to figure out if with added cost under a 1099 would it be beneficial to make the investment?

[Critter]

If you buy your own truck you would be an owner operator and would have to consider all the costs of being self employed and running a truck ... please sit down with a professional and discuss the options and considerations involved with this kind of venture.

[TaxGuyBill]

You can create two TurboTax files to see the results of each.  I recommend using the CD/downloaded version for that.


If you take a job as an employee, you should negotiate with your employer about this issue before taking the job.  The employer has the option to reimburse you for your Per Diem on a tax-free basis (an "Accountable Plan"), and doing that will save BOTH you AND your employer money.

For example, let's say your employee pay would be $65,000.  You should negotiate with your employer to pay you $50,000 in wages, but reimbursed your Per Diem expenses ($15,000) under an "Accountable Plan".  So both scenarios involve the employer giving you $65,000, but the latter on (the "Accountable Plan" reimbursement) will save BOTH you AND your employer taxes.

[Billycla]

Thank you for your advice

[VolvoGirl]

If you switch to independent contractor here's some info.  When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

For the future, There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>

You will pay Self Employment tax.  Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on Schedule 1 line 27.  The SE tax is already included in your tax due or reduced your refund.  It is on the Schedule 4 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

[SweetieJean]

https://www.irs.gov/businesses/small-businesses-self-employed/independent-contractor-self-employed-o...