Here is the IRS's Max Per Diem for Oregon area's. »
www.gsa.gov/portal/categ ··· y/100120A.) A self-employed person can only use per diem for the meal costs.
B.) per diem rate can be used for the combined costs of Lodging and M&IE. However, the rates vary depending
on location. Use the rate for the area where your contractor spends the night. The rates for the different cities are available in IRS Publication 1542.
C.) Thus, as a 1099 guy, you are self-employed, and thus whatever they give you (except maybe meal cost) needs to be reported:
Your need to report the income earned (including per diem) and reimbursements on Schedule C as INCOME.
You then deduct the expenses you incurred as deductible expenses.
The difference is your net income, which is subject to income taxes at your marginal rate and the self-employment tax (whatever that is now) , which is calculated on Schedule SE.
Simple Example:
@ $50/hour x 40/hours/week x 50 weeks/year = $100,000.00
Deduct business expense (say $1500/mo x 12 = $18,000) $100K - $18K = $82K in taxable gross income that transfers to your 1040. You can then apply normal itemized deductions like the kid and head of house hold and whatever else. Lets say this totals $12,000. So now your taxable income is ($82K - $12K) $70K. Your head-of-household fed taxes would be $12,359, leaving you with $57,641.
But...it doesn't stop there. Remember, you are self employed and need to pay for your own social security/FICA, etc. That may run another 9% - 13%, or another $10K or so kicking your take home to $47,641.
It's important to point out that your living cost have been paid already in the Oregon 1099 scenario. So look at your current situation. look at your current take home pay. Remember, you are
spending x amount of that to pay for your apartment, car, food, transportation, etc.
Lets say you are bringing home $60,000...BUT, of that bring home pay you pay ($1200/Mo x 12) $14,400/year for rent + ($400/mo. x 12 ) $4800 for food + $1,500/year for gas, which totals ($14K + 4.8K + 1.5K) $20,700.
Thus your $60,000 bring home is really ($60,000 - $20,700) $39,300. You would actually make $8K more in Oregon using those calculations (and remember, Oregon has no sales tax, which is an additional 10.5% discount of whatever you spend on yourself). Moreover, as a self-employed person, your deductible "expenses" may vary... You may claim much more than the amount I figured in business expenses. It could easily be twice as much **cough** cooked-up **cough** that you report, which could change your numbers dramatically.
Again, this is all off the cuff. I may be all wet with my tax assumptions and numbers. A tax professional is the way to go.
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