Ok here it is I am looking for your interpetation on the diffrence between being an employee and IC. With me it comes down to money and Taxes as I describe in the following scenario.

Company A tells you that you will be making $530 a day for 270 days work which comes out to about 145k with stipens. Then company A says well you are an employee and we will be taking your taxes off the top and you dont have to worry about it. If you are a single male lets say a very conservative taxation of 25% so thats about 37,775 in taxes off the 145K leaving you at 107,225K for 270 days work, now you are at 397 a day. That does not include the 50% employment tax that is not covered by company A. Well I know what you are thinking at the end of the year you will get some of the money back, you are right but you will still be shorted 10+K easily by being an employee instead of an IC. In addition to that your write offs will be limited since you are an employee and everything is provided, but in turn Company A can now increase their write off's since they are the ones supplying the equipment.

Realisticly you will be looking at $350 a day, at which point you have to ask yourself is it worth it?
Let me know what you think.

Even so, its still 10K a month after taxes if I'm reading your numbers right. That's a lot of money to me, but I'm single and have no real other dependents, so everyone's line is different I guess. I've made that 'little' before taxes over here and was happier than a pig in at the time, not that I'd like to do it again, but I don't see this as unbearable. I do see it as predictable though concerning the situation on the ground.

Even when you were an IC making $500 a day, sure you're making that NOW, but when tax time comes and you dump in 20-30K, that daily rate goes down to similar ground. I'm not counting the bonuses, because I frankly dismissed those as the ultimate bennies and didn't really expect those to sustain. That's my .02 ...

Militant_Danny wrote:

I'm not counting the bonuses, because I frankly dismissed those as the ultimate bennies and didn't really expect those to sustain. That's my .02 ...

Especially if the company keeps changing the contract on you, and forces you to sign the new contract with reduced bonus - at their whim. Unscrupulous, to say the least.

Not to be unexpected considering the caliber of some of their employees and management, though, since it seems more simple to keep the lackeys.


- recalled

Sounds like ther really is a Company "A" What a conincidence, I wish I was there a fly on the wall to see the reaction after the first paycheck, LOLOLOL.

Company A sounds like the firm that lowered the salary of a friend of mine in Iraq 2 months into his employment. They also have a reputation for being less than organized & seem to lose contracts after you get to your base of operation.

From the people I've talked to in passing at other sites, the rate hasn't changed for this program in awhile, if ever. But I don't have any paperwork in front of me to confirm just yet, only the dreaded "he told me this".

An average 5 day work work in the State equates to 260 workdays a year. The average salary is half of the 107K take home you quoted. The take home stateside on 53K is about 39K. Less when taking out co pays for insurance, 401s and so on.

You lose some write offs as an employee but you don't gamble as much in the tax game. If you and spouse both have insurance, between the two policies your medical expenses are covered. I would also offer that as an employee, any necessary shots, training, would be covered by the employer.

Add up what you pay for health insurance on your own and compare it what a company may offer with your co-pay. That very may be your 10K

I am not a tax authority by any stretch of the imagination, but the process I have used has worked well and not caused an audit by IRS.

After my retirement as a Cop, I created my own Security Consulting Company specializing in Private Investigations and Police/Security Training. For you, it could be whatever your specialty is; i.e., VIP Protection, Security Services, etc. The only paperwork required was a Ficticious Business Statement filed in the local newspaper. I am now a legitimate business in the eyes of government.

I then hired myself out as an Independent Contractor/Consultant to the Department of Justice as a Police Trainer in Afghanistan and Iraq. The recruiting/administration company (SAIC & MPRI) handled the salary, reported it to IRS and sent me a 1099 at the end of the year. At that point, no witholding was required, as it now is.

When filing your taxes and I have mine done by an accountant, all business expenses are a write off against your income. This can include but not limited to; office equipment/expenses in your home, lap top computer, health insurance coverage for you/family, travel expenses not covered by the administrator (example - upgrade from Economy to Business Class on those long overseas flights), any uniforms, guns, ammunition or equipment you buy, any training schools attended including lodging/meals, etc. The list goes on, but I think you get the point and your tax man can keep you honest and away from an audit. Additionally, he can also advise on the foreign income exclusion. If you are out of the country for 330 days, approximately, $87,000 of your income is tax exempt. You do have to pay both parts (employer/your) share of Social Security, but get credit for quarters worked. For you guys with higher incomes, consider setting up a SEP IRA Account for your retirement. This is tax deferred money and can go as high as $47,000 per year as a percentage of your total income. Again you tax man can advise on this.

These are just a few things you can do as a self-employed Independent Contractor to reduce your contributions to the new Great Society. A good tax preparer can advise on even more. Hope this has given you a few ideas to kick around. Best wishes to all.