Background: I'm 23, just out of college, living in New York City. I've been hired as the assistant of an author, working part time the last two months @ $400/week, paid to me via Venmo. In the New Year, I'm going full-time to be paid $800/week. I work from home, managing the author's website, answering emails, and shooting/editing videos for his YouTube channel.
I asked my boss if he could put me on payroll in the New Year. After talking with his accountant, my boss proposed a plan where he'd pay me an extra $600/month to go towards health-care, in exchange for me classifying myself as an Independent Contractor and foregoing payroll. He's told me it'll cost him more or less the same amount of money, but that he'd save the trouble of setting up payroll, and I'd be able to write off things as business expenses, because I'd be my own business (?). He's a nice guy, but I'm fresh out of university and don't know too much about taxes or health-care, so I'm concerned I might be taken advantage of.
After doing my own research, I've learned that Indie Contractors pay double the FICA taxes on their income (what I've heard called the "Self-Employed" tax), so I'd pay 7.65% extra tax on my annual income. Adding my Federal, State, and Local income taxes, I've calculated my post-tax income as an Independent Contractor would be: $35,000/year
On the other hand, as a W2 employee, though I'd get a lower salary, my boss would pay more of my taxes, so I calculated I'd take home $34,000/year, post tax.
While on paper, it does seem I'd make $1000 more this upcoming year by choosing to be an Independent Contractor, I'm wondering if there are other factors I'm not considering that make being a W2 employee more appealing.
I would really appreciate some guidance from /r/PersonalFinance. I've only ever lurked on Reddit before, but my roommate is an avid reader of this Sub-Reddit and suggested I pose this question to you guys.
Thank you so much!
Submitted December 02, 2018 at 10:13PM by Kay-of-Camelot https://ift.tt/2U8HOWo
