How does everybody else pay their taxes??

[BC Lightning]

I had a meeting with mine and my dad's financial advisors, Cain Watters, and went through everything needed for me to cover my taxes since I'm a 1099 employee, apparently I have to with hold 43% each month and pay every 3 months. I have to deposit social security as well as medicare in addition to withholding. My federal withholding rate will be about 28% of gross income. social security is 12.4% and medicare is 2.9% of income. Therefore, I must deposit 43% of gross income every 3 months. they told me that in the US you can get away with murder, but not paying taxes.

just curious as to how everybody else takes care of theirs

[L8 APEX]

Most folks employers do it behind the scenes for them. Most employers also match or contribute to SS and other withdrawals out of their pockets. Your tax guy should have those answers. Most contract workers, self emplyed folks try to expense and shuffle the money around so they effectively claim less as income, less taxes. Mileage, maintenace, travel, entertainment, equipment, medical, property tax, interest on certain type of loans etc.. You just have to know your deductions. Wes Tarbox or Dana are probably tax geniuses.

[BC Lightning]

Most folks employers do it behind the scenes for them. Most employers also match or contribute to SS and other withdrawals out of their pockets. Your tax guy should have those answers. Most contract workers, self emplyed folks try to expense and shuffle the money around so they effectively claim less as income, less taxes. Mileage, maintenace, travel, entertainment, equipment, medical, property tax, interest on loans etc.. You just have to know your deductions.

yeah he gave me a list of different thing I could claim and how much entertainment, miles, medical, etc I can claim

[Silver_2000]

1099 sucks

you end up paying both sides of the SS

BUT as terry said you get to deduct EVERYTHING

thats the KEY

[Ohmsby]

or form an s corp and pay yourself from it. As an independent rep you need to make sure that you are sheltered from liability of the product you sell. This is one layer that helps accomplish this and allows some tax benefits as well.

each situation is different but a good tax planner should be able to structure your deal as you need it the s corp also affords you some opportunities to do pretax investing roth ira 401k etc.

just .02

[BC Lightning]

or form an s corp and pay yourself from it. As an independent rep you need to make sure that you are sheltered from liability of the product you sell. This is one layer that helps accomplish this and allows some tax benefits as well.

each situation is different but a good tax planner should be able to structure your deal as you need it the s corp also affords you some opportunities to do pretax investing roth ira 401k etc.

just .02

It was only my first meeting with him so he didnt cover everything, mainly tax questions and plans

I already have a trust fund, retirement fund, Roth IRA and some others my dad set up for me when I was younger

I guess my main concern is making sure the IRS gets all of their money so I wont get audited

[Ohmsby]

It was only my first meeting with him so he didnt cover everything, mainly tax questions and plans

I already have a trust fund, retirement fund, Roth IRA and some others my dad set up for me when I was younger

I guess my main concern is making sure the IRS gets all of their money so I wont get audited

Trust fund ira etc. all of those things are unique to your current situation. You will want maximize your ability to invest,save, spend or what ever you want to accomplish.

Getting audited often is the luck of the draw. Utilize a good CPA and educate yourself and then make the decisions that are best for you.

One of my deals is similar to yours and I have had a S-corp for over a decade it works for me your situation may be different

[03LightningRocks]

Getting audited is typically generated by certain "flags". A good CPA will know what "flags" to avoid.

[Ohmsby]

Getting audited is typically generated by certain "flags". A good CPA will know what "flags" to avoid.
I agree

[BC Lightning]

Trust fund ira etc. all of those things are unique to your current situation. You will want maximize your ability to invest,save, spend or what ever you want to accomplish.

Getting audited often is the luck of the draw. Utilize a good CPA and educate yourself and then make the decisions that are best for you.

One of my deals is similar to yours and I have had a S-corp for over a decade it works for me your situation may be different

yes I am extremly fortunate to already have these acounts set up for me to add to, when i go back to meet with my CPA I'm sure we will cover these more indepth and how to maxamize them. The first meeting was to go over taxes and how to start saving for my quarterly tax payments and how not to get into trouble.

He said that $100 today is worth $1,000 10 years from now if you can save it, granted the value of the dollar my change as well as cost of living.

As far as the "flags" this is why I made the thread so I, or others my age can learn from any past experiences or problems and can learn how to avoid them.

[BC Lightning]

or form an s corp and pay yourself from it. As an independent rep you need to make sure that you are sheltered from liability of the product you sell. This is one layer that helps accomplish this and allows some tax benefits as well.

My dad and I actually talked about this tonight, i remember reading it in you post, I'm still a little unclear, but basicallyhe said that I could start my own company say Michael inc and pay myself a salary and set up a retirement fund through that

[dboat]

or form an s corp and pay yourself from it. As an independent rep you need to make sure that you are sheltered from liability of the product you sell. This is one layer that helps accomplish this and allows some tax benefits as well.

each situation is different but a good tax planner should be able to structure your deal as you need it the s corp also affords you some opportunities to do pretax investing roth ira 401k etc.

just .02


This is very good advice.. I am no tax expert but have run enough independents to know some of the ins and outs.. but having a savvy CPA that knows how to be legal but use the law of the land to your advantage is worth every penny.

Dana

[Ivanhoe_Farms]

My dad and I actually talked about this tonight, i remember reading it in you post, I'm still a little unclear, but basicallyhe said that I could start my own company say Michael inc and pay myself a salary and set up a retirement fund through that

Michael,

There is also something available to you as a 1099 called a SEP. Based upon your adjusted gross income, you can deposit up to $40,000 per year into this plan. The SEP is a self-funded retirement plan that you can start drawing out without a penalty after you reach 59 1/2 --- it becomes ordinary income when redeemed.

The SEP is PRE-TAX and reduces your gross income for tax purposes:nana2

[BC Lightning]

Michael,

There is also something available to you as a 1099 called a SEP. Based upon your adjusted gross income, you can deposit up to $40,000 per year into this plan. The SEP is a self-funded retirement plan that you can start drawing out without a penalty after you reach 59 1/2 --- it becomes ordinary income when redeemed.

The SEP is PRE-TAX and reduces your gross income for tax purposes:nana2


Milton, Thanks for the tip, I wil check into this more when I meet with my dad and CPA coming up soon