re: Independent Contractor Taxes Self-Employment HALP VIEW POST

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Another thing to keep in mind when comparing a salary/hourly to 1099/contract income is that, when you are salaried, your employer is paying a portion of your taxes. (I believe it's around half).

So - let's just say the tax rate is 20% -

  • In a salaried or hourly position where you earn 100k, you'll pay 10k (taken out of your paycheck, or when you file your taxes), and your employer will pay another 10k.
  • As a contractor, when you earn 100k, you'll pay the full 20k yourself.

Of course this is a simplification - but can be helpful to keep in mind when setting freelance rates: you're going to see a lot less of it than if it were salaried income.

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