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Contractor vs Employee
Image: – – Macho Spouse
So, you have a job offer and the employer offers you employment as either an independent contractor or an employee. You figure that since your wife is in the military, you don't need the insurance and your paycheck will be bigger without all that withholding taken out.
Life as a 1099'er
Ready to take that 1099? Not so fast. You might be in for a big shock at the end of the year. Here is a list of some of the hits you'll take.
• All the income taxes for each taxing entity will be due every quarter after your first year in business. A total of 90 percent must be paid by April 15 of the following year or there will be a penalty.
• You will have to pay the entire Social Security tax. That amounts to 15.3 percent on your first $113,700 and 2.9 percent over that amount. Employees get half that amount paid by their employer automatically. However, as a self-employed individual, you may deduct the half that an employer would have contributed.
• Independent contractors are not covered by non-discrimination laws, wage and hour protection, unemployment insurance, or pension and benefit protections that “real” employees receive.
• If you drive or run other equipment for the business that pays you, you won't be covered by the employer's insurance policy. Guess who that leaves?
What Makes an Employee
The basic issue in deciding whether a person is an employee or an independent contractor is the business's control over the work of the person. This sounds like a simple matter, but courts constantly are deluged with arguments about this issue.
If you're told when to come to work; if you don't provide your own equipment or supplies; and if you are paid in set increments such as hours or piecework, you are an employee, period. If they train you, you are an employee. The courts have made clear that just because the employer doesn't decide to use control, doesn't mean you are then an independent contractor. The crux of the matter is whether they have the right to do so. Read the IRS publication about the issue of contractors vs employees.
Making the Right Decision
Before you make any decisions, take some time to investigate and consider which category works best for you and your family. If you are leaning toward becoming an independent contractor, make sure you're prepared to save enough to cover your tax expenses and any additional costs like liability insurance.
Consider incorporating as a LLC to protect yourself and give you additional tax protection. It's a good idea to get the help of a paralegal, lawyer and tax specialist.
If you are considering becoming self-employed, be certain to read the IRS Bulletin Understanding Employment Taxes. This is a simple document that explains what the requirements are in everyday language.
This post was sponsored by the School of Firearms Technology from the Sonoran Desert Institute.
(The video is a little blurry due to some military spouse appreciation happening last night, but you'll be able to clearly hear who was selected as this year's winner.)
Congratulations to everyone who participated in the first ever Macho Spouse Scholarship Give-a-Way presented by the Sonoran Desert Institute! This year, every MachoSpouse.com member had a chance to win a free Gunsmithing Scholarship from SDI's School of Firearms Technology. Only one could win, and that's what sucks because several guys have shown a TON of passion and interest in this line of education. If you didn't win (tiny violins playing), don't worry because you may still be eligible for free tuition through the MyCaa grants. We recommend contacting SDI for more information and help with that process. If MyCaa isn't your thing, or your not eligible, SDI offers quite a few eBooks on gunsmithing that you can download for FREE from their website. Here are two of the more popular ones:
Again, these are FREE! Plus, they have a great YouTube channel filled with tutorials and such, AND we will continue to promote different gunsmithing “How To” videos on our site. SDI is trying hard to take care of ALL of us! (applause from the gallery)
Congratulations again to this year's winner and we hope everyone has a great Male Military Spouse Appreciation Day!
As our organization continues to grow and gains more attention from new people, I've learned that there is some confustion about our name. In fact, I have been asked multiple times if our name, “Macho Spouse,” represented a sexist, homophobic point of view. My response to those questions is a simple, no. Actually, the initial response is laughter and surprise with a slight dash of sorrow. This perception is mostly my fault for not spending enough time explaining the meaning behind our name as we grow, leaving others to define “Macho Spouse” for us. I chose our name after careful thought, consideration, and research. I wanted a name that could illustrate our lifestyle while making people smile. I mean, if we can't have a laugh at some of the gender-reversed situations we find ourselves in, then we're taking life too seriously.
Macho Spouse represents a male spouse who has enough self-confidence in his masculinity to cook dinner, clean the house, wash the laundry, and take care of his children while his wife is away in combat. We don't care what your race, religion, sex, or sexual preference is, if you're a military spouse who lives with honor and commitment to your family, you're a Macho Spouse and are always welcome here.
I appreciate your time and support, please help us by joining our conversation...or buying a shirt! I hope this helps better explain who we are and what our name symbolizes. Now I must run along and kick something because I just learned my wife is deploying again.
Chris Pape and the Macho Spouse Team