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Mark Taylor
Mark Taylor, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 1644
Experience:  Certified Public Accountant
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As a 1099 contractor does each employee owe social security

Customer Question

as a 1099 contractor does each employee owe social security and medicare at the end of the year as well?
Submitted: 9 months ago.
Category: Tax
Expert:  EmplmntLaw1 replied 9 months ago.

The short answer to your question is yes - independent or "1099" contractors pay fica, which is also known as payroll tax, which funds social security, medicare t. Contractors are supposed to make quarterly estimated tax payments, and within that tax is an approximate 15% payroll tax.

Customer: replied 9 months ago.

so the 1099 contractors pay 'the whole' responsibility of medicare and ss but if I have them as an employee I pay half?

Do they get penalized if they don't send quarterly payments? if so or not is there an amount earned cut off where they may get penalized?

What's the total percentage taxed on a $10 hour employee as a 1099 vs a payroll employee?

Expert:  EmplmntLaw1 replied 9 months ago.

Correct, 1099 pays all payroll tax versus employees paying half. The IRS does sometimes penalize those who do not make quarterly tax payments, there is no specific amount where they will be penalized that I know of.

The total percentage taxed on a $10 hour employee - approximately 1099 - 25% , payroll - 32%

Customer: replied 9 months ago.

hm... that's weird cause I thought I was paying half of their social security so then taxed while on payroll would be less to them...

Would you be able to give me an example of the breakdown on an employee that would earn about 9,000 for a year what the tax implications are to them (ss, medicare, fed + state etc)

and the same for me as the employer?

Just trying to nail down 1099 vs payroll for both sides

Expert:  EmplmntLaw1 replied 9 months ago.

Yes I have those numbers flip flopped...it ends up being about 7% more for the contractor because of the employer mandate to match the social security contribution.

Expert:  EmplmntLaw1 replied 9 months ago.

I believe this answers your question. However, if you need clarification or have follow-up questions regarding this matter, I will be happy to continue our conversation – simply reply to this answer. If you are otherwise satisfied with my response, please leave a positive rating as itis the only way I am able to get credit for my answers. Thank you, ***** ***** wish you all the best with this matter.

Customer: replied 9 months ago.

Yeah a breakdown of the taxes for Texas would be nice

Expert:  Mark Taylor replied 9 months ago.

Hi, my name is Mark. I will be happy to help you with your question.

Expert:  Mark Taylor replied 9 months ago.

At $9,000 both the employee would be paying $558 for FICA and $130.50 for Medicare for a total of $688.50. The federal withholding would not be an additional cost it would come from the $9,000 of wages. The wages would also be subject to Federal and State unemployment taxes. The amount for federal would be $42 the state would be higher and would depend on your rate. In Texas unemployment tax is charged on the first $9,000 of each employee's wages. So if your rate was 3% then the taxes would be $270. The rate range 0.45 to 7.47 in Texas. You would not have to worry about State Withholding.

Expert:  Mark Taylor replied 9 months ago.

The one thing you do have to worry about is if the individual can be classified as a contractor. The IRS has very specific rules on the differences between an employee and an independent contractor.

Expert:  Mark Taylor replied 9 months ago.

The link above is to the IRS website detailing the differences between an independent contractor and an employee.

Expert:  Mark Taylor replied 9 months ago.

I hope you found this information to be beneficial. If this answered your question please take a few moments to rate my response. A rating is needed in order for me to receive credit for helping you today. The rating bar is located at the top of the page – ranging from 1 to 5 stars. If you need me to clarify aspect of my response or if there are additional areas of the question that you would like me to consider please let me know. I would be happy to continue the discussion. It has been my pleasure helping you today.

Expert:  Mark Taylor replied 9 months ago.

If you have any additional questions or need clarification I am happy to help.

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