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lindahills123
New Member

I have been a contractor Vermont. I will end contract 9/9/22. I have accepted a FT position in VT. start date 10/3/22. Will this affect my taxes next year?

Another traveller at work said I might run into problems with my previous allowances I received this year
3 Replies
Mike9241
Level 15

I have been a contractor Vermont. I will end contract 9/9/22. I have accepted a FT position in VT. start date 10/3/22. Will this affect my taxes next year?

with the first job, you pay income taxes and self-employment taxes. if you're an employee at the second job, social security and medicare taxes will be taken out of your paychecks but they are about 7.65 % of taxable wages whereas self-employment taxes are about 14% of net S-E income. as an employee virtually all job-related expenses will no longer be deductible.  the deduction for self-employed health insurance may be limited. there may be an effect on the deductibility of medical expenses. only those in excess of 7.5 % of your adjusted gross income will be deductible if you itemize.  we can't see your 2021 returns or know what you'll be reporting in 2022 therefore the effect on your income taxes is unknown. I named just a few areas that can be affected. there are various free tax calculators available on the web. I can give you no assurances that they've been updated to reflect 2022 tax laws or their relative accuracy

NCperson
Level 15

I have been a contractor Vermont. I will end contract 9/9/22. I have accepted a FT position in VT. start date 10/3/22. Will this affect my taxes next year?

@lindahills123 what were the allowances for?  if there were things like a tool or travel allowance, as a contractor, that is income to you, but the actual tools you bought (or travel costs) can be deducted, so it's a pretty much a wash in the end.   But if you continue to get the allowance as a W-2 employee6, it remains taxable income to you, but you can't deduct the expenses.

 

Also, you will no longer be responsible for self-employment tax, but your employer will withhold social security and medicare tax, so without a long explanation, that is can be effective wash as well.  it depends on whether your pay is being adjusted when you move from contactor to W-2.

fanfare
Level 15

I have been a contractor Vermont. I will end contract 9/9/22. I have accepted a FT position in VT. start date 10/3/22. Will this affect my taxes next year?

"Will this affect my taxes next year?"

 

you will have two incomes to report instead of one.

Nothing unusual here.

 

@lindahills123 

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