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RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience:  CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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What would be the tax rate on $700.00 per week contract la

Resolved Question:

What would be the tax rate on $700.00 per week contract labor
Submitted: 5 years ago.
Category: Tax
Expert:  RD replied 5 years ago.
Are you single or married? What is the number of allowances that you would claim? Are you self employed or an employee?
Customer: replied 5 years ago.
single not sure of what allowances, employer calls it contract labor, go in 5 days a week and either repair broken equipment or operate it
Expert:  RD replied 5 years ago.
Does he give you a paycheck after deducting the payroll taxes(FICA and medicare)
Customer: replied 5 years ago.
nothing is withheld
Expert:  RD replied 5 years ago.

Ok so you are self employed.

 

As a self employed-

 

You can take any of the deductions incurred in the ordinary course of your business or profession. An ordinary expense is one that is common and accepted in your field of business. A necessary expense is one that is helpful and appropriate for your business. SOme of these expenses are listed on Sch C and are expenses such as office supplies, travel, maintenance, repairs, postage, etc.

You can deduct home office expenses if you are carrying on your business from home. Expenses that you may be able to deduct for business use of the home may include the business portion of real estate taxes, mortgage interest, rent, utilities, insurance, depreciation, painting and repairs.
Note that You can claim this deduction for the business use of a part of your home only if you use that part of your home regularly and exclusively:

  • As your principal place of business for any trade or business
  • As a place to meet or deal with your patients, clients or customers in the normal course of your trade or business

Generally, the amount you can deduct depends on the percentage of your home that you used for business. Your deduction will be limited if your gross income from your business is less than your total business expenses.

You can also depreciate computers, furniture, Equipment etc used for the purpose of business.

If you use your car in your business, you can deduct business mileage that represents your business use of the car.

Please note that If you use the standard mileage rate for a year, you cannot deduct your actual car expenses for that year. You cannot deduct depreciation, lease payments, maintenance and repairs, gasoline (including gasoline taxes), oil, insurance or vehicle registration fees.

On the net earnings you will be subject to self employment tax at the rate of 15.3%. You will get 50% of it as a deduction from your AGI.

Also, you will owe taxes on the self employment earnings and other income earned by you. The tax rate will depend on your overall tax bracket.

So, based on the above you can estimate your taxes and make quarterly payments to the IRS using the voucher Form 1040ES (which you can get from your nearest IRS office). Quarterly payments are normally due April 15th, June 15th, September 15th and Jan 15th(following yr).

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
RD and 5 other Tax Specialists are ready to help you
Customer: replied 5 years ago.
So if I don't really have any expenses, as all the equipment and and shop belong to the individual that pays me I have no deductions there?
Expert:  RD replied 5 years ago.

Yes...but you may have other expenses such as computers etc you buy for the business or cell phone expense or mileage to the jobs where you go to perform service and similar expense.

 

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

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