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</o:shapelayout></xml><![endif]--></head><body lang=EN-US link=blue vlink=purple><div class=WordSection1><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>The self employment tax is probably the main difference. When you work W2, the employer (whoever is writing the check) is required to pay half of the social security and Medicare taxes. On 1099, you wind up paying the full amount yourself. Normally, for 1099 the rate is about 15% of your gross pay. This year there is a temporary reduction in the rate, check irs.org or do a search for “self-employment tax”.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>So, the employer normally pays 7.5% of your rate directly to the IRS. You need to increase your rate by more than 7.5% to cover that. Add in the time spent doing extra paperwork and I’d suggest at least a 10% increase in your rate. You’ll be responsible to make quarterly tax payments to the IRS for any 1099 income you receive.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>This assumes you normally do contract work and don’t receive any benefits. If you’re switching from employment as a benefits receiving full time employee, you’ll need to determine what those benefits (health insurance, paid vacation, etc.) will cost you to replace and add that into the rate you charge.<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'>Joe<o:p></o:p></span></p><p class=MsoNormal><span style='font-size:11.0pt;font-family:"Calibri","sans-serif";color:#1F497D'><o:p> </o:p></span></p><div style='border:none;border-left:solid blue 1.5pt;padding:0in 0in 0in 4.0pt'><div><div style='border:none;border-top:solid #B5C4DF 1.0pt;padding:3.0pt 0in 0in 0in'><p class=MsoNormal><b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'>From:</span></b><span style='font-size:10.0pt;font-family:"Tahoma","sans-serif"'> consulting-bounces@drupal.org [mailto:consulting-bounces@drupal.org] <b>On Behalf Of </b>nan wich<br><b>Sent:</b> Tuesday, March 29, 2011 12:17 AM<br><b>To:</b> A list for Drupal consultants and Drupal service/hosting providers<br><b>Subject:</b> [consulting] Rate question<o:p></o:p></span></p></div></div><p class=MsoNormal><o:p> </o:p></p><div><div><p class=MsoNormal><span style='font-family:"Arial","sans-serif";color:black'>I usuually work on a W2 because I hate taxes. Every once in a while, a recruiter won't offer W2. How much differential should I allow in my rates to go to 1099? Personally, the paperwork hassle is worth 100%. I know the typical company claims about 40% burdening, but that includes office space.<br> <o:p></o:p></span></p></div><p><strong><i><span style='font-size:13.5pt;font-family:"Bookman Old Style","serif";color:#FF007F'>Nancy</span></i></strong><span style='font-family:"Arial","sans-serif";color:black'><o:p></o:p></span></p><p><span style='font-family:"Arial","sans-serif";color:black'>Injustice anywhere is a threat to justice everywhere. -- Dr. Martin L. King, Jr.<o:p></o:p></span></p></div></div></div></body></html>