Contract Taxes

[Riddle momma]

Hello
I just got a job flying a PC-12 as a contract pilot. I'll be getting a base pay per month, with an expense account. However, I'll only be receiving a 1099 form. Anybody out there in this kind of arrangement? How do you file taxes? What do you deduct? Do you have an LLC? Are there any advantages to forming a company? How do you handle health insurance? This is a first for me, so any advice is greatly appreciated!!!

 

[FlyFlyFly]

Get an LLC and a good accountant. You are going to be a HUGE fan of FairTax after you get done shelling out not only your income tax, but also your Social Security (6.2% on the first $90K), employer match of Social Security (6.2% on the first $90K), Medicare (1.45% WITH NO LIMIT) and Medicare employer match (1.45% WITH NO LIMIT).

If you figure you need to withold about 20% for Federal and God only knows what for state, you will pay out 35.3% of your income in taxes each quarter. You will also need to look into self-employment taxes, that wonderful portion of the tax code that encourages entrepreneurial spirit.

You will want an LLC so that you can deduct your health insurance. I would also get the accountant to set up a retirement account so you can shelter some savings from the taxman. You want to maximize the expenses against your LLC income so that the taxable amount is kept to a minimum. I would even sell my car to the LLC and have a "company car". Just make sure you have a good accountant to keep it all legit.

Best of luck. Most people do not figure this stuff when negotiating a contract pay rate. I hope you are getting at least $400 a day with a minimum days guarantee if you making yourself available for them.

 

[Otter]

fly is right on

All good advice, dont fall for the deduct your place or residence as office space, if and when you sell, the pay back is hell.

If you need more info or a good aviation accountant PM me, the one I used did a great job.

 

[h25b]

Start looking for full-time position...

My best advice after having done this for a very short time..

 

[59PA]

http://www.irs.gov/govt/fslg/article/0,,id=112718,00.html#3
You may in the eyes of the IRS be an employee.

 

[SCT]

Make sure you pay your taxes if you are doing contract pilot services. The IRS and I had a little "sitdown" over some unreported income from flying on the side..........and lets just say they won plus some.

SCT