I live in FL USA (so no state income tax if that changes anything). I've been offered a job paying $2300 USD a month, plus they cover my taxes monthly. So I bill two times a month , first is $1150, second bill is $1150 plus taxes for the month.
The company is based in the Netherlands, and the employees are all remote working around the world. I think I might be the only US employee, or possibly 1 other. There's under 50 total employees. They said they have researched and believe they have the right US rate but want me to confirm. However, they haven't told me what rate/% they came up with. I don't want to tell them a number that's COMPLETELY off-base from theirs, unless I'm positive I'm right. Everything is so confusing 😠What should I be billing/charging them to cover taxes?
I've been offered a 1099 job that will pay salary plus cover my taxes, what do I need to charge them for taxes?
byu/Educational-Emu-1870 intax
Posted by Educational-Emu-1870
14 Comments
It you are an employee, you don’t get a 1099.
Are you single or married? What state? Any children? Will this be your only income?
So they’re offering to “gross up” your monthly compensation so that, after you account for your tax liability, you will have net income of $2,300 per month?
If that’s correct, then how much total compensation you need depends on your filing status, any other income you have, etc..
If:
* this is your only income
* you have no business expenses
* you’re single, no dependents
* standard deduction
* no other adjustments, etc.
Then in 2025, you’d need gross compensation of $2,800 per month. After accounting for self-employment tax and federal income tax, you’d net $2,300 per month.
It’s different if you’re married, have another job, etc.
*EDIT: changed to $2,800/mo. Spreadsheet had business expenses leftover from previous calcs.*
lol this is a fun one. Classic accountant answer – it depends!
Are they also covering taxes on the portion they are paying you to cover taxes? If so, becomes a bit of a circular formula.
But, if I were you I’d probably go with my federal marginal rate + 15.3% for self employment taxes. That would cover Federal. Another 5% for state income taxes.
Do you have any expenses for the self employment work? If so, I might err on the side of caution and lower the overall rate. Gonna be some math, but if you do have deductible expenses, not all of your income will be taxable.
As a 1099 you will pay both sides of FICA 15.3%
Typically employers pay 7.65% for W2 employees.
Federal taxes depend on your household income. Employees typically pay this not employers. They don’t have anyway to know what your household income is and how much taxes you will pay.
This is not great pay at all if you are full time.  It would be $13.26 an hour.  Florida minimum wage is $14 an hour, so you’re under that, but this weird tax thing they are proposing muddies the waters a bit. Even Starbucks would pay more and offer some additional benefits – paid time off, healthcare, tips, etc.  Do you have set hours and are they providing the equipment? If so, you shouldn’t be classed as a 1099.Â
U.S. federal tax on $33,687 is $6087.
2300 x 12 + 6087 = 33,687
So 6087/12 is the monthly tax they should pay you.
I am assuming you are Single and have no other income.
You need to clarify with them if they will be adding only your social security+medicaid tax (15.3%) to compensate you for non-employee treatment, or also your income tax (depends on your tax bracket), which is normally paid by the taxpayer regardless if its W2 or contractor job.
They’d have to pay the irs and state themselves otherwise you’ll be taxed on the taxes they’d be paying you or you have to include the taxes on the tax they are paying you.
Roughly your self employment taxes will be 15% of salary. This covers employee and employer social security and Medicare. Actual income taxes will depend on how much you make, exemptions, etc., but if this is your only income and you file single your top income will be the 12% bracket.
Don’t forget to file quarterly estimated payments with the IRS.
This sounds like a scam of some type dude.
I think you should first verify the company is legit because there are a lot of weird things happening.
1. 1099 work would require they submit the documents to the IRS, are they going to?
2. 1099 work does *not* specify a min or max number of hours. You are given a project and asked to write X for product Y. How long it takes you would soley depend on you. It may take you 40 hours a week to do that, it may not. But YOU decide that, not them.
3. To answer your question…you need to do quarterly payments to meet your yearly amount due.
You should include your federal income tax (both from w2 and the 1099) and then your FICA on the 1099.
Ballpark you need to set aside about 25% for taxes at that scale, and whatever in hell your health care costs in these waning days of empire.
Maybe you’re married to a billionaire and you’re in the 37% tax bracket. So they need to pay you ~$4600 gross.
Or more realistically, maybe you buy ACA insurance (I’m guessing a $18k/yr W2 job doesn’t include health insurance), but the premium credit will decrease now that your income is higher. So they need to top you up more to make you whole. Or maybe you get a pay raise at your W-2 and end up paying more on the SE income also.
So while the ~$2900 someone calculated is probably about right, there are enough unknowns here that you really can’t generalize.