[jdlshore]

Self-employment is more expensive than you think. On the positive side, generous IRA limits. In the negative side, health insurance costs. In my experience, that’s what gets ya. Tax differences are fairly minor and not enough to cover the gap.

[01100011]

Really? It's been a few years since I was a 1099 contractor but it was pretty good. Write-offs for new computers and equipment, for the home office, for 10% of all utilities... Mileage... Did all that go away?

[jdlshore]

No, but it’s generally for expenses you wouldn’t otherwise have, if you’re being honest about it. There are some existing expenses you can write off (like the home office, internet, etc), but you also pay the so-called “self-employment tax” which doubles your social security and Medicare taxes (or something like that; it’s been a while).

The major benefit is that you can invest much more of your income into a SEP-IRA, which is a before-tax deduction. 25% of income or $75K, whichever is lower. That adds up.

But health insurance is a massive cost. Last time I ran the numbers, which admittedly was a while ago, my income as a self-employed consultant had to be much higher than my income as an employee in order to reach the same take-home amount.

I’m not a CPA and wasn’t interested in squeezing every dollar out of the system. I had a simple sole proprietor LLC. So there may be other tricks to pull. But the tax writeoffs are overrated, in my experience, other than the IRA. It’s not free money; for the most part, it’s a discount on purchases you wouldn’t otherwise be making, and a lot more hassle to boot.

[01100011]

> my income as a self-employed consultant had to be much higher than my income as an employee in order to reach the same take-home amount.

Yeah, I typically charged double my salary rate. You have to pay for your own sick time and vacation time. I think that's generally baked in to the rate.