[CAUT] Tax advantages; was University of Idaho Piano Tech Vacancy

[Jeff Tanner]

> How would going from a full-time self-employed piano technician to 1/2 
> self-employed and 1/2 employee effect social security and expenses (I 
> would guess cut in half).   I'm trying to weigh the tax consequences of 
> this...
>
> David Ilvedson, RPT
> Pacifica, CA  94044

I think that would be difficult to estimate, and would depend on each 
different individual's earning, dependents and deductions, and would be 
different from year to year. When I was full-time, I could earn as much as 
$30K extra (I never did) without having to pay more tax than had been 
withheld on my $52K salary. But I'm married with 4 dependents.

With half & half, you would, or should, have the earnings reversed to some 
unpredictable proportion, and  so it would be hard to know. But you know 
that as an employee your FICA is based on gross salary, and the employer 
pays roughly half of it. (I think this is a government business tax 
incentive to keep employee salaries up a bit. If the employee were left with 
the responsibility of the whole amount, the employer has no incentive to pay 
the employee enough to cover the tax. But I digress...)  The self-employed 
pay the full 14% (or whatever the exact percentage is), but only on NET 
income.  And net income for self-employed comes after expenses for 
automobiles, tools, computers, internet service, cell phones, etc., all 
things the employee has to pay for AFTER the government gets its part.  So, 
it would be very difficult to estimate.

Jeff