query: Difference between Vanguard sp500 UCITS and Vanguard sp500

positive: The main difference is that VOO trades on US stock exchanges while VUSA/VUSD trade on the London Stock Exchange.  (VUSA is listed in British pounds while VUSD is listed in US dollars.) They are essentially the same product, but the fees and legal hurdles for a European citizen to trade on the LSE may be quite different from those on US stock exchanges.

negative: My thinking is that since the last time a drop like that happened was back in the early 1930's, calling a drop of that magnitude, even if off by 2 years, is still an impressive feat. That's equivalent today to calling the SP500 to be under 400 by a certain date. Sheer insanity to make that kind of call.   Not saying either of us is correct, I think we just have different perspectives on accuracy.

negative: It's either a broad benchmark sp500, msci world, lehman agg, and or a cash index. Most will not use a specific benchmark.  While the broad benchmark may not be applicable from my experience its usually there as a proxy for the overall market.

negative: To supplement Ben's answer: Following 'smart money' utilizes information available in a transparent marketplace to track the holdings of professionals.  One way may be to learn as much as possible about fund directors and monitor the firms holdings closely via prospectus. I believe certain exchanges provide transaction data by brokers, so it may be possible for a well-informed individual to monitor changes in a firms' holdings in between prospectus updates.  An example of a play on 'smart money':  S&P500 companies are reviewed for weighting and the list changes when companies are dropped or added. As you know there are ETFs and funds that reflect the holdings of the SP500.  Changes to the list trigger  'binary events' where funds open or close a position. Some people try to anticipate the movements of the SP500 before 'smart money' adjusts their positions. I have heard some people define smart money as people who get paid whether their decisions are right or wrong, which in my opinion, best captures the term. This Udemy course may be of interest: https://www.udemy.com/tools-for-trading-investing/

negative: I'd look at VXX, I believe it closely tracks what you are looking to do. http://www.ipathetn.com/product/VXX/ However, as already noted in other responses, this isn't trading VIX itself (in fact it is impossible to do so).  Instead, this ETF gives exposure to short-term SP500 futures contracts, which in theory should be very correlated to market volatility.

negative: I think India and Africa are going to center of the economic growth market in the next two decades. Probably more India, since they have the means to develop and a culture that wants it. I think the growth rates are all relative, but you obviously know the standard growth rate of the Sp500. I just can't see it falling because we are still in the middle of a complete globalization and I really think it won't be over before I retire. It will probably yake Africa 50 years before they reach a first world living standards we enjoy now. God only knows what we will have as the definition of first world by then.   The medical industry alone will drive a large portion of growth. Cyber security is going to be the next frontier in tech as the internet of things explode into our daily life.   I am not as weary about long term growth. We are always innovating and creating new markets. The beauty of the Sp500 is that it doesn't even have to be in the US to make money off it.

negative: As someone fairly new to finance and investing in their 30s, the market is doing too well right now for me to use someone else to tell me how to invest the Sp500 alone is doing so well it is almost a can't miss. I am smart enough to know right now that it is easy and the real value if a financial planner comes when the market is going down. Which is impossible to predict.

negative: "You cannot actually buy an index in the true sense of the word.  An index is created and maintained by a company like Standard and Poor's who licenses the use of the index to firms like Vanguard.  The S&P 500 is an example of an index.  The S&P 500 ""index includes 500 leading companies"", many finical companies sell products which track to this index.  The two most popular products which track to indexes are Mutual Funds (as called Index Funds and Index Mutual Funds) and Exchange Traded Funds (as called ETFs).  Each Index Mutual Fund or ETF has an index which it tracks against, meaning they hold securities which make up a sample of the index (some indexes like bond indexes are very hard to hold everything that makes them up). Looking at the Vanguard S&P 500 Index Mutual Fund (ticker VFINX) we see that it tracks against the S&P 500 index.  Looking at its holdings we see the 500-ish stocks that it holds along with a small amount of bonds and cash to handle cash flow for people buying and sell shares.  If we look at the Vanguard S&P 500 ETF (ticker VOO) we see that it also tracks against the S&P 500 index.  Looking at its holdings we see they are very similar to the similar Index Mutual Fund. Other companies like T. Rowe Price have similar offering.  Look at the T. Rowe Price Equity Index 500 Fund (ticker PREIX) its holdings in stocks are the same as the similar Vanguard fund and like the Vanguard fund it also holds a small amount of bonds and cash to handle cash flow. The only real difference between different products which track against the same index is in the expense ratio (fees for managing the fund) and in the small differences in the execution of the funds.  For the most part execution of the funds do not really matter to most people (it has a very small effect), what matters is the expense (the fees paid to own the fund).  If we just compare the expense ratio of the Vanguard and T. Rowe Price funds we see (as of 27 Feb 2016) Vanguard has an expense ratio of 0.17% for it Index Mutual Fund and 0.05% for its ETF, while T. Rowe Price has an expense ratio of 0.27%.  These are just the fees for the funds themselves, there are also account maintenance fees (which normally go down as the amount of money you have invested at a firm go up) and in the case of ETFs execution cost (cost to trade the shares along with the difference between the bid and ask on the shares). If you are just starting out I would say going with the Index Mutual Fund would easier and most likely would cost less over-all if you are buying a small amount of shares every month.  When choosing a company look at the expense ratio on the funds and the account maintenance fees (along with the account minimals).  Vanguard is well known for having low fees and they in fact were the first to offer Index Mutual Funds. For more info on the S&P 500 index see also this Investopedia entry on the S&P 500 index. Do not worry if this is all a bit confusing it is to most people (myself included) at first."

negative: Your tax efficient reasoning is solid for where you want to distribute your assets. ETFs are often more tax efficient than their equivalent mutual funds but the exact differences would depend on the comparison between the fund and ETF you were considering. The one exception to this rule is Vanguard funds and ETFs which have the exact same tax-efficiency because ETFs are a share class of the corresponding mutual fund.

negative: "Yes, you can. You could either go through brokerages like Ameritrade or fund companies like Fidelity or Vanguard. Yes there are minimums depending on the fund where some retail funds may waive a minimum if you sign up for an ""Automatic Investment Plan"" and some of the lower cost funds may have higher initial investment as Vanguard's Admiral share class is different from Investor for example."

negative: There's a few different types of investments you could do. As poolie mentioned, you could split your money between the Vanguard All World ex-US and Vanguard Total Stock Market index. A similar approach would be to invest in the Vanguard Total World Stock ETF. You wouldn't have to track separate fund performances, at the downside of not being able to allocate differential amounts to the US and non-US markets (Vanguard will allocate them by market cap). You could consider investing in country-specific broad market indices like the S&P 500 and FTSE 100. While not as diversified as the world indices, they are more correlated with the country's economic outlook. Other common investing paradigms are investing in companies which have historically paid out high dividends and companies that are under-valued by the market but have good prospects for future growth. This gets in the domain of value investing, which an entire field by itself. Like Andrew mentioned, investing in a mutual fund is hassle-free. However, mutual fees/commissions and taxes can be higher (somewhere in the range 1%-5%) than index funds/ETF expense ratios (typically <0.50%), so they would have to outperform the market by a bit to break-even. There are quite a few good books out there to read up about investing. I'd recommend The Intelligent Investor and Millionaire Teacher to understand the basics of long-term investing, but of course, there are many other equally good books too.

negative: No, IRA contributions can only be made in the form of cash (rollovers and conversions are different). You'd have to sell the investments in your taxable account, incurring capital gains or losses, then transfer the proceeds to your IRA in cash. Note that the amount you can transfer is subject to the limits on how much one can contribute to the IRA each year. You could look into Vanguard Target Retirement funds, which have a lower $1,000 minimum investment, or Vanguard ETFs.

negative: I couldn't find historical data either, so I contacted Vanguard Canada and Barclays; Vanguard replied that  This index was developed for Vanguard, and thus historical information is available as of the inception of the fund. Unfortunately, that means that the only existing data on historical returns are in the link in your question. Vanguard also sent me a link to the methodology Barclay's uses when constructing this index, which you might find interesting as well.  I haven't heard from Barclays, but I presume the story is the same; even if they've been collecting data on Canadian bonds since before the inception of this index, they probably didn't aggregate it into an index before their contract with Vanguard (and if they did, it might be proprietary and not available free of charge).

negative: I don't really see the big deal in taking the check. Fidelity will issue you a check, made payable to VANGUARD FBO [Your Name]. All you have to do is simply hand the check over to Vanguard to deposit into your new IRA. Simple and done. To answer your question: Whether or not a custodian, tpa, or recordkeeper will do a direct-deposit or transfer of your funds is completely at their discretion. My company rarely does direct transfers. We issue a check to you. It's just the way we do it. You can talk to Vanguard and see if they can initiate the direct transfer with Fidelity - but honestly, this may just delay getting your funds moved and you're going to end up with a check anyways. And if Vanguard does somehow convince Fidelity to do the wire transfer - there is still going to be a fee. Wires are expensive. Unless Vanguard is willing to pick up the wire fee for you (doubtful). Other's have also mentioned that TPA's will withhold a mandatory 20% federal tax withholding if they send you a check. This is only true if the check gets made payable in your name. But the taxes should not be withheld as long as the check is made payable to your new Vanguard IRA. So my final opinion: Just take the check and give it to your Vanguard rep. It's literally that simple.

negative: "You can have as many IRA accounts as you want (whether Roth or Traditional), so you can have a Roth IRA with American Funds and another Roth IRA with Vanguard if you like. One disadvantage of  having too many IRA accounts with small balances in each is that most custodians  (including Vanguard) charge an annual fee for maintaining IRA accounts with small balances but waive the fee if the balance is large. So it is best to keep your Roth IRA in just one or two funds with just one or two custodians until such time as investment returns plus additional contributions made over the years makes the balances large enough to diversify further. Remember also that you cannot contribute the maximum to each IRA; the sum total of all your IRA contributions (doesn't matter whether to Roth or to Traditional IRAs) for any year must satisfy the limit for that year. You can move money from one IRA of yours to another IRA (of the same type) of yours without any tax issues to worry about. Such movements (called rollovers or transfers) are  not contributions and do not count towards the annual contribution limit. The easiest way to do move money from one IRA account to another IRA account is by a trustee-to-trustee transfer where the money goes directly from one custodian (American Funds in this case) to the other custodian (Vanguard in this case). The easiest way of accomplishing this is to call Vanguard or go online on their website, tell them that you are wanting to  establish a Roth IRA with them, and that you want to fund it by transferring money held in a Roth IRA with American Funds. Give Vanguard the account  number of your existing American Funds IRA, tell them how much  you want to transfer over -- $1000 or $20,000 or the entire balance as the case may be -- and tell Vanguard to go get the money.  In a few days' time, the money will appear in your new Vanguard Roth IRA and the American Funds Roth IRA will have a smaller balance, possibly a zero balance, or might even be closed if you told Vanguard to collect the entire balance.  DO NOT approach American Funds and tell them that you want to transfer money to a new Roth IRA with Vanguard: they will bitch and moan and drag their heels about doing so because  they are unhappy to lose your business, and will probably screw up the transfer. Talk to Vanguard only. They are eager to get their hands on your IRA money and will gladly take care of the whole thing for you at no charge to you. DO NOT cash in any stock shares, or mutual fund shares, or whatever is in your Roth IRA in preparation for ""cashing out of the old account"". There is a method where you take a ""rollover distribution"" from your American Funds Roth IRA and then deposit the money into your new Vanguard Roth IRA within 60 days, but I recommend most strongly against using this because too many people manage to screw it up. It is 60 days, not two months; the clock starts from the day American Funds cuts your check, not when you get the check, and it is stopped when the money gets deposited into your new account, not the day you mailed the check to Vanguard or the day that Vanguard received it,  and so on. In short, DO NOT try this at home:  stick to a trustee-to-trustee transfer and avoid the hassles."

negative: There is little difference between buying shares in your broker's index fund and shares of their corresponding ETF.  In many cases the money invested in an ETF gets essentially stuffed right into the index fund (I believe Vanguard does this, for example).  In either case you will be paying a little bit of tax.  In the ETF case it will be on the dividends that are paid out.  In the index fund case it will additionally be on the capital gains that have been realized within the fund, which are very few for an index fund.  Not a ton in either case.  The more important tax consideration is between purchase and sale, which is the same in either case. I'd say stick it wherever the lowest fees are.

negative: Here is a nice overview from Vanguard on some options for a small business owner to offer retirement accounts.   https://investor.vanguard.com/what-we-offer/small-business/compare-plans I would look over the chart and decide which avenue is best for you and then call around to investment companies (Vanguard, Fidelity, etc. etc.) asking for pricing information.

negative: There are a couple of cases where I'd argue in favor of the 401k: Employer matching - If the employer matches your contributions, then it makes sense to get these additional investments which if you are in a low bracket may exist as highly-compensated employees may want those in the lower brackets to contribute as much as they can. Investment options - If the employer has enough assets in the plan, there could be access to institutional versions of those funds.  For example, compare Vanguard Institutional Index Instl Pl (VIIIX) with Vanguard 500 Index Inv (VFINX), where the expense ratio in the former is just .02% while the latter is .17%.  Granted this is a minor difference in expenses, there is something to be said for how much a .15% drag year over year could add up.

negative: "Been here in Japan 12 years mate, and you're right, the investment options here suck. Be very wary of them, they will take all your money in outrageous fees--3% in and 3% out of some ""investment"" options. It's a scam. Send the money back home and manage it there. I recommend setting up a Vanguard account back in the UK, then you can invest in Vanguard index funds. Vanguard charges no commission for buying and selling their funds when you have a Vanguard account. I have nearly all my money there (Vanguard US), and I use the free Personal Capital online software to understand how to best manage the allocations in my portfolio. Of course you'll lose a bit of money on wire transfer fees, but you'll more than make up for it if in the long-term, and they may also be offset by currency rate anyway (right now the yen is strong, so a good time to use it to buy GBP). Also you may never need to send the money back to Japan unless you plan on retiring here."

negative: My main criterion for choosing a broker is the fee schedule. I care about investing in index funds and paying as little as possible in fees. In the US that brings everyone to Vanguard or Fidelity, and currently Vanguard edges Fidelity out on costs for the particular funds I am invested in.

negative: "Don't do it until you have educated yourself enough to know what you are doing. I hope you won't take this personally, but given that you are wandering around asking random strangers on the Internet how to ""get into investing,"" I feel safe in concluding that you are by no means a sophisticated enough investor to be choosing individual investments, nor should you be trusting financial advisors to choose investments for you. Believe me, they do not have your interests at heart. I usually advise people in your position to start by reading one book: A Random Walk Down Wall Street by Burton Malkiel. Once you've read the book by Malkiel you'll understand that the best strategy for all but the most sophisticated investors is to buy an index fund, which simply purchases a portfolio of ALL available stocks without trying to pick winners and losers. The best index funds are at Vanguard (there is also a Vanguard site for non-US residents). Vanguard is one of the very, very, very few honest players in the business. Unlike almost any other mutual fund, Vanguard is owned by its investors, so it has no profit motive. They never try to pick individual stocks, so they don't have to pay fancy high-priced analysts to pick stocks. If you find it impossible to open a Vanguard account from wherever you're living, find a local brokerage account that will allow you to invest in the US stock market. Many Vanguard mutual funds are available as ETFs which means that you buy and sell them just like any other stock on the US market, which should be easy to do from any reasonably civilized place."

negative: From Vanguard's Best practices for portfolio rebalancing:

negative: This depends on: Here in the US where I am, interest rates were around 3.9% when I fixed my mortgage. This underperforms the market, e.g., a total market ETF like $VTI or an SP500 ETF like $VOO have expected returns of ~7+%, the current market growth rate. So, in theory I am better off paying into the market, and making returns greater than my interest rate, rather than paying into the equity.  HOWEVER, past market returns do not guarantee future market returns. The market could reset. It could crash. Are you willing to accept this risk? You have to analyze what happens if the market suffers say a 30% correction and you lose a lot of money quickly.  I would certainly not invest in individual (non-ETF) stocks, or you are really exposing yourself to risk.

negative: Extortionate expense ratio aside, comparing the fund to the vanguard balanced fund (with an expense ratio of 0.19%) shows that your bank's fund has underperformed in literally every shown time period. Mind you, the vanguard fund is all US stocks and bonds which have done very well whereas the CIBC fund is mostly Canadian. Looking at the CIBC top 10 holdings does seem to suggest that it's (poorly) actively managed instead of being an index tracker for what that's worth. Maybe your bank offers cheaper transaction costs when buying their own funds but even then the discount would have to be pretty big to make up for the underperformance. Basically, go Vanguard here.

negative: Vanguard has just recently started listing its funds in London but it doesn't look like the High Dividend Yield ETF is available yet. You'll need to either get a broker who can trade on the U.S. markets (there might be tax and exchange rate complications), or wait until Vanguard lists this stock on the London exchange.

negative: People that argue for an FTT, whether they know it or not, are directly advocating for savers to have reduced stock market returns, making it even harder to save for retirement.  Make no mistake - a financial transactions tax would disproportionately hurt middle class savers the most.  In almost every article I see advocating an FTT, the authors have a profound misunderstanding about how financial markets work.  They focus on jealousy politics (target the rich!) and dismiss the hugely detrimental effects on the market as obscure academic objections.  FFTs impose a DIRECT cost on ALL investors in four major ways: (1) larger bid/ask spreads, (2) higher volatility, (3) reduced capital mobility, and obviously (4) the tax itself.  All of these things are BAD for any investor.  Advocates for FFT essentially want the stock market to be less efficient.  Even investors that make NO trades during the year will see the returns drop on their ETFs, mutual funds, index funds, that they are accumulating for retirement.  Why?  Institutional funds (Vanguard, Fidelity, etc) churn billions of dollars during the normal course of business handling buy/sell orders, portfolio rebalancing, unit creation/elimination.  Increased bid/ask spreads make these transactions more expensive, higher volatility makes them more risky, reduced capital mobility reduces volumes available to trade, and the tax adds to the cost.  All of these effects show up as reduced returns on a typical fund.  Vanguard put the reduced returns on the order of 1% depending on fund style - in other words, hundreds of thousands of dollars in lost savings compounded over a middle class working career.  For a middle class saver, that could mean the difference between retiring at a reasonable age or never being able to retire!  But don't take my word on it.  [There are an extensive number of studies and statements from both academia and industry on this subject, all saying the same thing.](https://modernmarketsinitiative.org/topics/ftt/)  When Vanguard says an FTT will hurt investors, people should listen.  Vanguard is perhaps the most consumer friendly investment firm in history, single-handedly responsible for bringing investing costs down near zero.  They have done more for middle class investors than virtually any other firm.

negative: Wells Fargo.  They have an account called PMA, an umbrella account for checking, savings, mortgage, and brokerage accounts.  It would cost $30/month, but I never had to pay because I have a rollover retirement account that is enough to waive the fees.  They count all accounts, including mortgage, which I used to have.  Oh, and no restrictions.  An added advantage is there are no fees for any of the accounts, nor for some other things, like bank checks, outside ATM fees, etc.    I'm in California, so I don't know if the same deal exists in other states.  But if you qualify for the free account, it's pretty good.  Actually, most of my investments are Vanguard funds.  And I have another rollover account with Vanguard, and never pay fees, but I only buy or sell from one Vanguard fund to another, and rarely since I have targeted retirement funds that are designed to be no maintenance.  For some reason, I trust Vanguard more than most other funds; maybe because I like their philosophy on low-cost funds, which they started but are now getting more popular.

negative: I think you can do better than the straight indexes. For instance Vanguard's High Yield Tax Exempt Fund has made 4.19% over the past 5 years. The S&P 500 Index has lost -2.25% in the same period. I think good mutual funds will continue to outperform the markets because you have skilled managers taking care of your money.  The index is just a bet on the whole market.  That said, whatever you do, you should diversify. List of Vanguard Funds

negative: That expense ratio on the bank fund is criminally high. Use the Vanguard one, they have really low expenses.

negative: Your financial advisor got a pretty good commission for selling you the annuity is what happened. As for transferring it over to Vanguard (or any other company) and investing it in something else, go to Vanguard's site, tell them that you want to open a new Roth IRA account by doing a trustee-to-trustee transfer from your other Roth IRA account, and tell them to go get the funds for you from your current Roth IRA trustee.  You will need to sign some papers authorizing Vanguard to go fetch, make sure all the account numbers and the name of the current trustee (usually a  company with a name that includes Trust or Fiduciary as shown on your latest statement) are correct, and sit back and wait while your life improves.

negative: Thanks very much.  12b1 is a form that explains how a fund uses that .25-1% fee, right? So that's part of the puzzle im getting at.  I'm not necessarily trying to understand my net fees, but more who pays who and based off of what.   For a quick example, betterment bought me a bunch of vanguard ETFs. That's cool. But vanguard underperformed vs their blackrock and ssga etfs. I get that vanguard has lower fees, but the return was less even taking those into account.  I'm wondering, first what sort of kickback betterment got for buying those funds, inclusive of wholesale deals, education fees etc.  I'm also wondering how this food chain goes up and down the sponsor, manager tree.  I'm sure it's more than just splitting up that 1%

negative: "I would create a ""Rollover IRA"".   These IRAs are designed to take funds from a 401k and allow you to invest them without incurring a cash out penalty nor a tax due.   You will have more choices than if you leave it at your old 401k. If you cash out the 401k, you'll have much less to invest ($1500 - penalty - taxes) vs. doing a rollover 401k where you'll still have $1500 to invest. Then, once the money is inside the new Rollover IRA you can invest in whatever you please.   If you want to invest in Vanguard funds, I recommend opening the Rollover IRA at Vanguard.  Here is Vanguard's information page about rollovers from 401ks: https://investor.vanguard.com/what-we-offer/401k-rollovers/401k-403b-to-ira-rollover-benefits When you next change jobs and have another 401k with funds in it, you can roll it into the same Rollover IRA."

negative: Direct roll-overs / trustee to trustee transfers are typically initiated by the receiving institution. Therefore you need to work with Vanguard. They will have a form in which you provide them with your fidelity account info and they will then contact Fidelity and initiate the transfer.  Do not take the option of being sent a check made out to you by Fidelity (an indirect rollover). There are too many ways to muck up and get hit with penalties if you are the middleman in the process. I believe in most, if not all, cases the IRS now requires a 20% withholding on indirect 401k rollovers. This is because too many times people would initiate a roll over but not complete it either at all or within the allowed 60 day window and then come tax time be unable to pay the tax and penalty on the distribution. The tricky part of that withholding is that you still have to deposit that amount into the new account otherwise it becomes a distribution subject to tax and penalties (and that means coming up with the money from other accounts). So in summary talk to Vanguard and set up an institution to institution transfer. They souls make this very easy as they want your money. And do not do any kind of rollover where you come into personal possession of the money.  If the check is made out to Vanguard but sent to you to resend to Vanguard that should not be an issue as that is still a trustee to trustee transfer.  Fidelity may have a minor account closer fee that will be deducted from the value of the account before it is sent.


query: How to calculate my estimated taxes. 1099 MISC + Self Employment

positive: There is a shortcut you can use when calculating federal estimated taxes.  Some states may allow the same type of estimation, but I know at least one (my own--Illinois) that does not. The shortcut: you can completely base your estimated taxes for this year on last year's tax return and avoid any underpayment penalty.  A quick summary can be found here (emphasis mine): If your prior year Adjusted Gross Income was $150,000 or less, then   you can avoid a penalty if you pay either 90 percent of this year's   income tax liability or 100 percent of your income tax liability from   last year (dividing what you paid last year into four quarterly   payments). This rule helps if you have a big spike in income one year,   say, because you sell an investment for a huge gain or win the   lottery. If wage withholding for the year equals the amount of tax you   owed in the previous year, then you wouldn't need to pay estimated   taxes, no matter how much extra tax you owe on your windfall. Note that this does not mean you will not owe money when you file your return next April; this shortcut ensures that you pay at least the minimum allowed to avoid penalty. You can see this for yourself by filling out the worksheet on form 1040ES.  Line 14a is what your expected tax this year will be, based on your estimated income.  Line 14b is your total tax from last year, possibly with some other modifications.  Line 14c then asks you to take the lesser of the two numbers.  So even if your expected tax this year is one million dollars, you can still base your estimated payments on last year's tax.

positive: This is wrong.  It should be  or  Now, to get back to self-employment tax.  Self-employment tax is weird.  It's a business tax.  From the IRS perspective, any self-employed person is a business.  So, take your income X and divide by 1.0765 (6.2% Social Security and 1.45% Medicare).  This gives your personal income.  Now, to calculate the tax that you have to pay, multiply that by .153 (since you have to pay both the worker and employer shares of the tax).   So new calculation  or they actually let you do  which is better for you (smaller).   And your other calculations change apace.   And like I said, you can simplify Q1se to  and your payment would be  Now, to get to the second quarter.  Like I said, I'd calculate the income through the second quarter.  So recalculate A based on your new numbers and use that to calculate Q2i.   or  Note that this includes income from both the first and second quarters.  We'll reduce to just the second quarter later.  This also has you paying for all of June even though you may not have been paid when you make the withholding payment.  That's what they want you to do.   But we aren't done yet.  Your actual payment should be  or  Because Q2ft and Q2se are what you owe for the year so far.  Q1ft + Q1se is what you've already paid.  So you subtract those from what you need to pay in the second quarter.  In future quarters, this would be  All that said, don't stress about it.  As a practical matter, so long as you don't owe $1000 or more when you file your actual tax return, they aren't going to care.  So just make sure that your total payments match by the payment you make January 15th.   I'm not going to try to calculate for the state.  For one thing, I don't know if your state uses Q1i or Q1pi as its base.  Different states may have different rules on that.  If you can't figure it out, just use Q1i, as that's the bigger one.  Fix it when you file your annual return.  The difference in withholding is going to be relatively small anyway, less than 1% of your income.

positive: "There are a couple of things that are missing from your estimate. In addition to your standard deduction, you also have a personal exemption of $4050.  So ""D"" in your calculation should be $6300 + $4050 = $10,350. As a self-employed individual, you need to pay both the employee and employer side of the Social Security and Medicare taxes.  Instead of 6.2% + 1.45%, you need to pay (6.2% + 1.45%) * 2 = 15.3% self-employment tax. In addition, there are some problems with your calculation. Q1i (Quarter 1 estimated income) should be your adjusted annual income divided by 4, not 3 (A/4). Likewise, you should estimate your quarterly tax by estimating your income for the whole year, then dividing by 4.  So Aft (Annual estimated federal tax) should be: Quarterly estimated federal tax would be: Qft = Aft / 4 Annual estimated self-employment tax is: Ase = 15.3% * A with the quarterly self-employment tax being one-fourth of that: Qse = Ase / 4 Self employment tax gets added on to your federal income tax.  So when you send in your quarterly payment using Form 1040-ES, you should send in Qft + Qse. The Form 1040-ES instructions (PDF) comes with the ""2016 Estimated Tax Worksheet"" that walks you through these calculations."

positive: "One way to do these sorts of calculations is to use the spreadsheet version of IRS form 1040 available here.  This is provided by a private individual and is not an official IRS tool, but in practice it is usually accurate enough for these purposes.  You may have to spend some time figuring out where to enter the info.  However, if you enter your self-employment income on Schedule C, this spreadsheet will calculate the self-employment tax as well as the income tax.  An advantage is that it is the full 1040, so you can also select the standard deduction and the number of exemptions you are entitled to, enter ordinary W-2 income, even capital gains, etc. Of course you can also make use of other tax software to do this, but in my experience the ""Excel 1040"" is more convenient, as most websites and tax-prep software tend to be structured in a linear fashion and are more cumbersome to update in an ad-hoc way for purposes like tax estimation.  You can do whatever works for you, but I would recommend taking a look at the Excel 1040.  It is a surprisingly useful tool."

negative: "Yes, you can deduct up to your Adjusted Gross Income (AGI) or your contribution limit, whichever is lower. Note that this reduces your taxable income, not your taxes.  This is self-employment income, which is included as compensation for IRA purposes.   You still have to pay self-employment taxes (Social Security and Medicare) though.  You pay those before calculating AGI.  So this won't entirely shield your 1099 income from taxes, just from income taxes.   Note that if you have both W-2 and 1099-MISC income, you don't get to pick which gets ""shielded"" from taxes.  It all gets mixed together in the same bucket.  There may be additional limitations if you are covered by a retirement plan at work."

negative: I'm not sure 1099-MISC is what you should expect. Equity means ownership, and in LLC context it means membership. As an LLC member, you'll get distributions and should receive a K-1 form for tax treatment, not 1099 or W2. If the CEO is talking about 1099 it means he's going to hire you as a contractor which contradicts the statement about equity allocation. That's an entirely different situation. 1) Specifically, would the 1099-MISC form be used in this case? 1099-MISC is used to describe various payments. Depending on which box is filled, the tax treatment may be as of employment income (subject to SE taxes) or passive income (royalties, rents, etc - subject to various limitations in the tax code). 3) If this is the only logical method of compensation (receiving a % of real estate sales), how would it be taxed? That would probably be a commission and taxed as employment income. I suggest to get a professional tax adviser consultation on this issue, with specific details, numbers, and kinds of deals involved. You can get gain or lose a lot of money just because you're characterized as a contractor and not LLC member or employee (each has its own benefits and disadvantages, and you have to consider them all). 4) Are there any advantages/disadvantages to acquiring and selling   properties through the company as opposed to receiving a % of sales? Yes. There are advantages and there are disadvantages. For example, if you're using a corporation, you can get salary, if you're a contractor you cannot. There are a lot of issues hidden in this distinction (which I've just discussed with KeithS in this argument).

negative: FICA taxes are separate from federal and state income taxes. As a sole proprietor you owe all of those.  Additionally, there is a difference with FICA when you are employed vs. self employed.  Typically FICA taxes are actually split between the employer and the employee, so you pay half, they pay half. But when you're self employed, you pay both halves. This is what is commonly referred to as the self employment tax. If you are both employed and self employed as I am, your employer pays their portion of FICA on the income you earn there, and you pay both halves on the income you earn in your business. Edit: As @JoeTaxpayer added in his comment, you can specify an extra amount to be withheld from your pay when you fill out your W-4 form. This is separate from the calculation of how much to withhold based on dependents and such; see line 6 on the linked form. This could allow you to avoid making quarterly estimated payments for your self-employment income. I think this is much easier when your side income is predictable. Personally, I find it easier to come up with a percentage I must keep aside from my side income (for me this is about 35%), and then I immediately set that aside when I get paid. I make my quarterly estimated payments out of that money set aside.  My side income can vary quite a bit though; if I could predict it better I would probably do the extra withholding. Yes, you need to pay taxes for FICA and federal income tax.  I can't say exactly how much you should withhold though. If you have predictable deductions and such, it could be lower than you expect. I'm not a tax professional, and when it comes doing business taxes I go to someone who is. You don't have to do that, but I'm not comfortable offering any detailed advice on how you should proceed there. I mentioned what I do personally as an illustration of how I handle withholding, but I can't say that that's what someone else should do.

negative: Are the amounts in those boxes taxes that have already been removed? Yes. If they are, how do I report these totals? When I entered the information from the 1099-MISC, it only asked for the total, and didn't ask for (what I thought were) the taxes already taken out. It should appear on your 1040 line 64 (and similar line on your State tax return). If the program doesn't ask for all the 1099 fields (which is stupid), you can add it as additional taxes paid in the Credits section, somewhere in the area where they ask about estimated payments etc.

negative: Per IRS regulations, if your stipend is not paying you for qualified expenses (primarily, tuition and books; explicitly not room and board or travel), it is taxable.  It doesn't require self-employment taxes (which are Medicare and FICA, normally paid in part by an employer), but it is taxable income from an income tax perspective.  You can generally deduct your books and such if you have your receipts - expenses 'required' by the institution for the coursework.  Do verify that the amount on the 1099-MISC reflects what you actually received in cash above and beyond the tuition waiver - don't assume the college did this the way you expect, or even properly.  Your bank statements should match the amount on the form. You should definitely include it in your gross income and pay taxes on it.  If you received alternate instruction, you should clarify that with the people doing the filing, and follow up with a supervisor perhaps (it's possible the volunteers helping at an event like this aren't familiar with this part of tax preparation). (Source, in addition to IRS regulations - I was my wife's tax preparer many of the years she was in her Ph.D. program.)

negative: Your clients should not send you 1099-MISC if they paid with a credit card. You can refer them to this text in the instructions for the form 1099-MISC: Payments made with a credit card or payment card and certain other   types of payments, including third party network transactions, must be   reported on Form 1099-K by the payment settlement entity under section   6050W and are not subject to reporting on Form 1099-MISC. See the   separate Instructions for Form 1099-K. By sending out the 1099-MISC, your clients are essentially saying that they paid you directly (check or cash) in addition to the payment they made with a credit card (which will be reported on 1099-K). In case of an audit, you'll have trouble convincing the IRS that it didn't happen. I suggest asking the clients not to do this to you, since it may cost you significant amounts to fight the IRS later on. In any case, you report on your tax return what you really got, not what the 1099 says. If you have two 1099's covering the same income - there's no legal obligation to report the income twice. You do not have to pay twice the tax just because you have stupid clients. But you may have troubles explaining it to the IRS, especially if you're dealing with cash in your business. If you want to avoid matching issues, consider reporting all the 1099s, and then subtracting the duplicates and attaching a statement (the software will do it automatically when you add the description in the miscellaneous item) about what it is.

negative: "If you receive a 1099-MISC from YouTube, that tells you what they stated to the IRS and leads into most tax preparation software guided interviews or wizards as a topic for you to enter.  Whether or not you have a 1099-MISC, this discussion from the IRS is pertinent to your question. You could probably elect to report the income as a royalty on your copyrighted work of art on Schedule E, but see this note: ""In most cases you report royalties in Part I of Schedule E (Form 1040). However, if you ... are in business as a self-employed writer, inventor, artist, etc., report your income and expenses on Schedule C or Schedule C-EZ (Form 1040)."" Whether reporting on Schedule E or C is more correct or better for your specific circumstances is beyond the advice you should take from strangers on the internet based on a general question - however, know that there are potentially several paths for you.   Note that this is revenue from a business, so if you paid for equipment or services that are 100% dedicated to your YouTubing (PC, webcam, upgraded broadband, video editing software, vehicle miles to a shoot, props, etc.) then these are a combination of depreciable capital investments and expenses you can report against the income, reducing the taxes you may owe.  If the equipment/services are used for business and personal use, there are further guidelines from the IRS as to estimating the split. These apply whether you report on Sch. E, Sch. C, or Sch C-EZ.    Quote: ""Self-Employment Income It is a common misconception that if a taxpayer does not receive a Form 1099-MISC or if the income is under $600 per payer, the income is not taxable. There is no minimum amount that a taxpayer may exclude from gross income. All income earned through the taxpayer’s business, as an independent contractor or from informal side jobs is self-employment income, which is fully taxable and must be reported on Form 1040. Use Form 1040, Schedule C, Profit or Loss from Business, or Form 1040, Schedule C-EZ, Net Profit from Business (Sole Proprietorship) to report income and expenses. Taxpayers will also need to prepare Form 1040 Schedule SE for self-employment taxes if the net profit exceeds $400 for a year. Do not report this income on Form 1040 Line 21 as Other Income. Independent contractors must report all income as taxable, even if it is less than $600. Even if the client does not issue a Form 1099-MISC, the income, whatever the amount, is still reportable by the taxpayer. Fees received for babysitting, housecleaning and lawn cutting are all examples of taxable income, even if each client paid less than $600 for the year. Someone who repairs computers in his or her spare time needs to report all monies earned as self-employment income even if no one person paid more than $600 for repairs."""

negative: Do you get cash (or a deposit into your bank account) of your PhD stipend and then you immediately send the university a check to pay the tuition fee (which might be more than the cash you get from the University)? Or does the University simply keep the stipend money, transferring it from one pocket to another in essence, and say, OK, you have paid your tuition except for $X that you still owe us? Or does the university grant you a tuition waiver as part of your assistantship and reports this as income on Form 1099-MISC? In all of these cases, the money reported on Form 1099-MISC is not taxable income to you, and it is neither subject to Self-Employment tax (basically, Social Security and Medicare tax -- both the employee's share and the employer's share) nor to (Federal) income tax.

negative: Forms 1099 and W2 are mutually exclusive. Employers file both, not the employees. 1099 is filed for contractors, W2 is filed for employees. These terms are defined in the tax code, and you may very well be employee, even though your employer pays you as a contractor and issues 1099. You may complain to the IRS if this is the case, and have them explain the difference to the employer (at the employer's expense, through fines and penalties). Employers usually do this to avoid providing benefits (and by the way also avoid paying payroll taxes). If you're working as a contractor, lets check your follow-up questions: where do i pay my taxes on my hourly that means does the IRS have a   payment center for the tax i pay. If you're an independent contractor (1099), you're supposed to pay your own taxes on a quarterly basis using the form 1040-ES. Check this page for more information on your quarterly payments and follow the links. If you're a salaried employee elsewhere (i.e.: receive W2, from a different employer), then instead of doing the quarterly estimates you can adjust your salary withholding at that other place of work to cover for your additional income. To do that you submit an updated form W4 there, check with the payroll department on details. Is this a hobby tax No such thing, hobby income is taxed as ordinary income. The difference is that hobby cannot be at loss, while regular business activity can. If you're a contractor, it is likely that you're not working at loss, so it is irrelevant. what tax do i pay the city? does this require a sole proprietor   license? This really depends on your local laws and the type of work you're doing and where you're doing it. Most likely, if you're working from your employer's office, you don't need any business license from the city (unless you have to be licensed to do the job). If you're working from home, you might need a license, check with the local government. These are very general answers to very general questions. You should seek a proper advice from a licensed tax adviser (EA/CPA licensed in your state) for your specific case.

negative: I'm not sure how this gets entered in TurboTax, but this income from the company should be included in the Schedule C (or C-EZ) Line 1 Gross Receipts total, along with all of your 1099-MISC income from your business and any other income that your business took in. You don't need a 1099 from them, and the IRS doesn't care (at least from your perspective) if you got a 1099 or not; in fact, they probably expect you to have some non-1099 income.  We don't know why the company chose not to issue 1099 forms, but luckily it isn't your concern. You can fill out your tax return properly without it.  Note: This answer assumes that you didn't have any tax withheld from your checks from this company. If you did have tax withheld, you'll need to insist on a 1099 to show that.

negative: "You can make estimated tax payments on Form 1040-ES.  Most people who make such payments need to do it quarterly because the typical reasons for making estimated payments is something like self-employment income that a person will get throughout the year.  If you have a one-time event like a single, large sale of stock, however, there's nothing wrong with doing it just one quarter out of the year. When it comes time to file your taxes, part of the calculate is whether you were timely quarter-by-quarter not just for the entire year, so if you do have a big ""one-time"" event mid-year, don't wait until the end of the year to file an estimated payment.  Of course, if the event is at the end of the year, then you can make it a 4th quarter estimated payment."

negative: "From the IRS page on Estimated Taxes (emphasis added): Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If the amount of income tax withheld from your salary or pension is not enough, or if you receive income such as interest, dividends, alimony, self-employment income, capital gains, prizes and awards, you may have to make estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax. I think that is crystal clear that you're paying income tax as well as self-employment tax. To expand a bit, you seem to be confusing self-employment tax and estimated tax, which are not only two different things, but two different kinds of things.  One is a tax, and the other is just a means of paying your taxes. ""Self-employment tax"" refers to the Social Security and Medicare taxes that you must pay on your self-employment income.  This is an actual tax that you owe.  If you receive a W-2, half of it is ""invisibly"" paid by your employer, and half of it is paid by you in the form of visible deductions on your pay stub.  If you're self-employed, you have to pay all of it explicitly. ""Estimated tax"" does not refer to any actual tax levied on anyone.  A more pedantically correct phrasing would be ""estimated tax payment"".  Estimated taxes are just payments that you make to the IRS to pay tax you expect to owe.  Whether you have to make such payments depends on how much tax you owe and whether you've paid it by other means.  You may need to pay estimated tax even if you're not self-employed, although this would be unusual.  (It could happen, for instance, if you realized large capital gains over the year.)  You also may be self-employed but not need to pay estimated tax (if, for instance, you also have a W-2 job and you reduce your withholding allowances to have extra tax withheld). That said, if you earn significant income from self-employment, you'll likely have to make estimated tax payments.  These are prepayments of the income tax and Social Security/Medicare taxes you accrue based on your self-employment income. As Pete B. mentioned in his answer, a possible reason that your estiamtes are low is because some taxes have already been withheld from the paychecks you received so far during the year (while you were an employee).  These represent tax payments you've already made; you don't need to pay that money a second time, but you may need to make estimated tax payments for your income going forward."

negative: With your income so high, your marginal tax rate should be pretty easy to determine.  You are very likely in the 33% tax bracket (married filing jointly income range of $231,450 to $413,350), so your wife's additional income will effectively be taxed at 33% plus 15% for self-employment taxes. Rounding to 50% means you need to withhold $19,000 over the year (or slightly less depending on what business expenses you can deduct). You could use a similar calculation for CA state taxes. You can either just add this gross additional amount to your withholdings, or make an estimated tax payment every quarter.  Any difference will be made up when you file your 2017 taxes. So long as you withhold 100% of your total tax liability from last year, you should not have any underpayment penalties.

negative: "You can list it as other income reported on line 21 of form 1040.  In TurboTax, enter at: - Federal Taxes tab (Personal in  Home & Business) - Wages & Income -“I’ll choose what I work on” Button Scroll down to: -Less Common Income -Misc Income, 1099-A, 1099-C. -The next screen will give you several choices. Choose ""Other reportable Income"". You will reach a screen where you can type a description of the income and the amount. Type in the amount of income and categorize as Tutoring."

negative: "Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to ""gross up"" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . .  The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33.  The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle.  The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The ""gross-up"" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table.  If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld."

negative: "You are on the right track, for tax purposes its all ordinary income at the end of 2016. If the free lance ""employer"" will withhold fed,state and local tax, then that takes care of your estimated tax. If they can't or won't, you will need to make those estimates and make payments quarterly for the fed and state tax at your projected tax liability.  Or, you can bump up withholding by your day job employer and cover your expected tax liability at year end without making estimated tax payments."

negative: One possibility that I use: I set up an LLC and get paid through that entity. Then I set up a payroll service through Bank of America and set up direct deposit so that it is free.  I pay myself at 70% of my hourly rate based on the number of hours I work, and the payroll service does all the calculations for me and sets up the payments to the IRS.  Typically money is left over in my business account. When tax time rolls around, I have a W2 from my LLC and a 1099 from the company I work for. I put the W2 into my personal income, and for the business  I enter the revenue on the 1099 and the payroll expenses from paying myself; the left over in the business account is taxed as ordinary income. Maybe it's overkill, but setting up the LLC makes it possible to (a) set up a solo 401(k) and put up to $51k away tax-free, and (b) I can write off business expenses more easily.

negative: You need to clarify with Bob what your agreement is. If you and Bob are working together on these jobs as partners, you should get a written partnership agreement done by a lawyer who works with software industry entity formation. You can legally be considered a partnership if you are operating a business together, even if there is nothing in writing. The partnership will have its own tax return, and you each will be allocated 50% of the profits/losses (if that's what you agree to). This amount will be reported on your own individual 1040 as self-employment income. Since you have now lost all the expense deductions you would have taken on your Schedule C, and any home office deduction, it's a good idea to put language in the partnership agreement stating that the partnership will reimburse partners for their out-of-pocket expenses. If Bob is just hiring you as a contractor, you give him your SSN, and he issues you a 1099, like any other client. This should be a situation where you invoice him for the amount you are charging. Same thing with Joe - figure out if you're hiring him as an independent contractor, or if you have a partnership. Either way, you will owe income and self-employment tax on your profits. In the case of a partnership, the amount will be on the K-1 from the partnership return. For an independent contractor who's operating as a sole proprietor, you report the income you invoiced for and received, and deduct your expenses, including independent contractors that you hired, on your Schedule C. Talk to your tax guy about quarterly estimated payments. If you don't have a tax guy, go get one. Find somebody people in your city working in your industry recommend. A good tax person will save you more money than they cost. IRS Circular 230 Notice: Please note that any tax advice contained in this communication is not intended to be used, and cannot be used, by anyone to avoid penalties that may be imposed under federal tax law.

negative: "My number one piece of advice is to see a tax professional who can guide you through the process, especially if you're new to the process. Second, keep detailed records. That being said, I found two articles, [1] and [2] that give some relevant details that you might find helpful. The articles state that: Many artists end up with a combination of income types: income from   regular wages and income from self-employment. Income from wages   involves a regular paycheck with all appropriate taxes, social   security, and Medicare withheld. Income from self-employment may be in   the form of cash, check, or goods, with no withholding of any   kind. They provide a breakdown for expenses and deductions based on the type of income you receive.  If you get a regular paycheck: If you've got a gig lasting more than   a few weeks, chances are you will get paid regular wages with all   taxes withheld. At the end of the year, your employer will issue you a   form W-2. If this regular paycheck is for entertainment-related work   (and not just for waiting tables to keep the rent paid), you will   deduct related expenses on a Schedule A, under ""Unreimbursed Employee   business expenses,"" or on Form 2106, which will give you a total to   carry to the schedule A. The type of expenses that go here are: If you are considered an independent contractor (I presume this includes the value of goods, based on the first quoted paragraph above): Independent contractors get paid by cash or check with no withholding   of any kind. This means that you are responsible for all of the Social   Security and Medicare normally paid or withheld by your employer; this   is called Self-Employment Tax. In order to take your deductions, you   will need to complete a Schedule C, which breaks down expenses into   even more detail. In addition to the items listed above, you will   probably have items in the following categories: Ideally, you should receive a 1099 MISC from whatever employer(s) paid you as an independent contractor. Keep in mind that some states have a non-resident entertainers' tax, which is  A state tax levied against performers whose legal residence is outside   of the state where the performance is given. The tax requires that a   certain percentage of any gross earnings from the performance be   withheld for the state. Seriously, keep all of your receipts, pay stubs, W2's, 1099 forms, contracts written on the backs of napkins, etc. and go see a tax professional."

negative: This sounds like a rental fee as described in the instructions for the 1099-MISC.   Enter amounts of $600 or more for all types of rents, such as    any of the following. ... Non-Employee compensation does not seem appropriate because you did not perform a service. You mention that your tax-preparer brought this up.  I think you will need to consult with a CPA to receive a more reliable opinion.  Make sure to bring the contract that describes the situation with you.  From there, you may need to consult a tax attorney, but the CPA should be able to help you figure out what your next step is.

negative: I am surprised no one has mentioned the two biggest things (in my opinion).  Or I should say, the two biggest things to me.  First, 1099 have to file quarterly self employment taxes.  I do not know for certain but I have heard that often times you will end up paying more this way then even a W-2 employees.  Second, an LLC allows you to deduct business expenses off the top prior to determining what you pay in taxes as pass-through income.  With 1099 you pay the same taxes regardless of your business expenses unless they are specifically allowed as a 1099 contractor (which most are not I believe).  So what you should really do is figure out the expense you incur as a result of doing your business and check with an accountant to see if those expenses would be deductible in an LLC and if it offsets a decent amount of your income to see if it would be worth it.  But I have read a lot of books and listened to a lot of interviews about wealthy people and most deal in companies not contracts.  Most would open a new business and add clients rather than dealing in 1099 contracts.  Just my two cents... Good luck and much prosperity.

negative: I've had zero taxable income for the past 2 years and yet the calculations say I owe the government $250 for each year for the Self Employment tax.  How can they charge a non-zero tax on my income when my taxable income is zero?  That is theft. That demands reform.

negative: "The translation scheme is detailed in IRS Publication 15, ""Employer's Tax Guide"". For the 2010 version, the information is in Section 16 on Page 37. There are two ways that employers can calculate the withheld tax amount: wage bracket and percentage. Alternatively, they can also use one of the methods defined in IRS Publication 15-A. I'll assume the person making $60k/yr with 10 allowances is paid monthly ($5000/period) and married. Using the wage bracket method, the amount withheld for federal taxes would be $83 per pay period. Using the percentage method, it would be $81.23 per pay period. I don't recommend that you use this information to determine how to fill out your W-4. The IRS provides a special online calculator for that purpose, which I have always found quite accurate. Note: ""allowances"" are not the same as ""dependents""; ""allowances"" are a more realistic estimation of your tax deductions, taking into consideration much more than just your dependents."

negative: I can't find specific information for Form 1099-DIV for this tax year.  However, I found this quote for next tax season that talks about Form 1099-B: Due date for certain statements sent to recipients.   The due date for furnishing statements to recipients for   Forms 1099-B, 1099-S, and 1099-MISC (if amounts are   reported in box 8 or 14) is February 15, 2018. [emphasis added] I know many brokerages bundle the 1099-DIV with the 1099-B, so one might assume that the deadlines are the same.  February 15 seems consistent with the messages I got from my brokerages that said the forms will be mailed by mid-February.

negative: "I have done similar software work. You do not need an LLC to write off business expenses. The income and expenses go on Schedule C of your tax return. It is easy to write off even small expenses such as travel - if you keep records. The income should be reported to you on a 1099 form, filled out by your client, not yourself.  For a financial advisor you should find one you can visit with personally and who operates as a ""fee-only"" advisor. That means they will not try to sell you something that they get a commission on. You might pay a few $hundred per visit. There are taxes that you have to pay (around 15%) due to self-employment income. These taxes are due 4 times a year and paid with an ""estimated tax"" form. See the IRS web site, and in particular schedule SE. Get yourself educated about this fast and make the estimated tax payments on time so you won't run into penalties at the end of the year."

negative: "The annualized method allows you to take a look at each quarter independently and pay the tax in the quarter that you earned it. -- According to Linda Durand, a certified public accountant with Drolet & Associates PLLC in Washington, D.C., from the Bankrate article ""Paying quarterly estimated taxes""  And after paying annualized quarterly estimates, you can still owe up to $1000 at tax time without penalty."

negative: "This seems to depend on what kind of corporation you have set up. If you're set up as a sole proprietor, then the Solo 401k contributions, whether employee or employer, will be deducted from your gross income.  Thus they don't reduce it. If you're set up as an S-Corp, then the employer contributions, similar to large employer contributions, will be deducted from wages, and won't show up in Box 1 on your W-2, so they would reduce your gross income.  (Note, employee contributions also would go away from Box 1, but would still be in Box 3 and 5 for FICA/payroll tax purposes). This is nicely discussed in detail here. The IRS page that discusses this in more (harder to understand) detail is here. Separately, I think a discussion of ""Gross Income"" is merited, as it has a special definition for sole proprietorships. The IRS defines it in publication 501 as: Gross income.    Gross income is all income you receive in the form of money, goods, property, and services that is not exempt from tax. If you are married and live with your spouse in a community property state, half of any income defined by state law as community income may be considered yours. For a list of community property states, see Community property states under Married Filing Separately, later. Self-employed persons.    If you are self-employed in a business that provides services (where products are not a factor), your gross income from that business is the gross receipts. If you are self-employed in a business involving manufacturing, merchandising, or mining, your gross income from that business is the total sales minus the cost of goods sold. In either case, you must add any income from investments and from incidental or outside operations or sources. So I think that regardless of 401(k) contributions, your gross income is your gross receipts (if you're a contractor, it's probably the total listed on your 1099(s))."

negative: Careful.  I would personally need a LOT more than $5 more per hour to go from W-2 employment to 1099 employment.  It boils down to two reasons: (1) employers pay a huge amount of taxes on behalf of their employees, and (2) you would have to pay all of your own withholding up front. Your current proposal from them doesn't account for that. There are also risks that you face as a 1099.  On the first item, your employer currently pays 6.2% of your Social Security tax. You pay the other 6.2%. If you go to 1099 status, you will be self-employed as an independent contractor and have to pay the full 12.4% out of your increased 1099 wages.  On the second item, your employer also does your withholding out of your paychecks based on what you tell them on a form W-4. If you're disciplined enough to pay this out yourself in estimated taxes every time you get a paycheck, great. Many people aren't and just see a much bigger paycheck with no taxes out of it, and end up with a large tax bill at the end of the year.  Overall, there are some other considerations like healthcare and other benefits. These will not be available to you as a 1099 employee. You can also be terminated spontaneously, unless you have a specific contract length with the company.  As I see it, not including any benefits you would receive, you're looking at LESS money in your pocket at $50/hr as a contractor than at your $48/hr. Your pay net social security deductions is: $48 x 40 hrs x 52 weeks = 99,840 * .938 = 93,649.92. As a 1099 @ $50/hr you would net $50 x 40 hrs x 52 weeks = 104,000 * .876 = 91,104.  Then there are the rest of taxes, etc to figure out your real take-home pay.  I'm not a tax advisor, but I would be very careful to get the whole picture figured out before jumping. I would ask for a lot more with the added risk you would take as an independent, too.

negative: "It's not possible to determine whether you can ""expect a refund"" or whether you are claiming the right number of exemptions from the information given.   If your wife were not working and you did not do independent contracting, then the answer would be much simpler.  However, in this case, we must also factor in how much your contracting brings in (since you must pay income tax on that, as well as Medicare and, probably, Social Security), whether you are filing jointly or separately, and your wife's income from her business.   There are also other factors such as whether you'll be claiming certain child care expenses, and certain tax credits which may phase out depending on your income.   If you can accurately estimate your total household income for the year, and separate that into income from wages, contracting, and your wife's business, as well as your expenses for things like state and local income and property taxes, then you can make a very reasonable estimate about your total tax burden (including the self-employment taxes on your non-wage income) and then determine whether you are having enough tax withheld from your paycheck.  Some people may find that they should have additional tax withheld to compensate for these expenses (see IRS W-4 Line #6)."

negative: "The short answer is - ""Your employer should typically deduct enough every paycheck so you don't owe anything on April 15th, and no more."" The long answer is ""Your employer may make an error in how much to deduct, particularly if you have more than 1 job, or have any special deductions/income. Calculate your estimated total taxes for the year by estimating all your income and deductions on a paper copy of a tax return [I say paper copy so that you become familiar with what the income and deductions actually are, whereas plugging into an online spreadsheet makes you blind to what's actually going on]. Compare that with what your employer deducts every paycheck, * the number of paychecks in the year. This tells you how much extra you will pay / be refunded on April 15th, as accurately as you can estimate your income and deductions."""

negative: As a new (very!) small business, the IRS has lots of advice and information for you. Start at https://www.irs.gov/businesses/small-businesses-self-employed and be sure you have several pots of coffee or other appropriate aid against somnolence.  By default a single-member LLC is 'disregarded' for tax purposes (at least for Federal, and generally states follow Federal although I don't know Mass. specifically), although it does have other effects. If you go this route you simply include the business income and expenses on Schedule C as part of your individual return on 1040, and the net SE income is included along with your other income (if any) in computing your tax. TurboTax or similar software should handle this for you, although you may need a premium version that costs a little more.  You can 'elect' to have the LLC taxed as a corporation by filing form 8832, see https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc . In principle you are supposed to do this when the entity is 'formed', but in practice AIUI if you do it by the end of the year they won't care at all, and if you do it after the end of the year but before or with your first affected return you qualify for automatic 'relief'. However, deciding how to divide the business income/profits into 'reasonable pay' to yourself versus 'dividends' is more complicated, and filling out corporation tax returns in addition to your individual return (which is still required) is more work, in addition to the work and cost of filing and reporting the LLC itself to your state of choice. Unless/until you make something like $50k-100k a year this probably isn't worth it. 1099 Reporting. Stripe qualifies as a 'payment network' and under a recent law payment networks must annually report to IRS (and copy to you) on form 1099-K if your account exceeds certain thresholds; see https://support.stripe.com/questions/will-i-receive-a-1099-k-and-what-do-i-do-with-it  . Note you are still legally required to report and pay tax on your SE income even if you aren't covered by 1099-K (or other) reporting. Self-employment tax. As a self-employed person (if the LLC is disregarded) you have to pay 'SE' tax that is effectively equivalent to the 'FICA' taxes that would be paid by your employer and you as an employee combined. This is 12.4% for Social Security unless/until your total earned income exceeds a cap (for 2017 $127,200, adjusted yearly for inflation), and 2.9% for Medicare with no limit (plus 'Additional Medicare' tax if you exceed a higher threshold and it isn't 'repealed and replaced'). If the LLC elects corporation status it has to pay you reasonable wages for your services, and withhold+pay FICA on those wages like any other employer. Estimated payments. You are required to pay most of your individual income tax, and SE tax if applicable, during the year (generally 90% of your tax or your tax minus $1,000 whichever is less). Most wage-earners don't notice this because it happens automatically through payroll withholding, but as self-employed you are responsible for making sufficient and timely estimated payments, and will owe a penalty if you don't. However, since this is your first year you may have a 'safe harbor'; if you also have income from an employer (reported on W-2, with withholding) and that withholding is sufficent to pay last year's tax, then you are exempt from the 'underpayment' penalty for this year.  If you elect corporation status then the corporation (which is really just you) must always make timely payments of withheld amounts, according to one of several different schedules that may apply depending on the amounts; I believe it also must make estimated payments for its own liability, if any, but I'm not familiar with that part.

negative: I believe it's not only legal, but correct and required. A 1099 is how a business reports payments to others, and they're required by the IRS to send them for payments of $600 or more (for miscalleneous payments like this). The payment is an expense to the landlord and income to you, and the 1099 is how that's documented (although note that if they don't send you a 1099, it's still income to you and you still need to report it as such). It's similar to getting a 1099-INT for interest payments or a 1099-DIV for dividend payments. You'll get a 1099-MISC for a miscellaneous payment. If you were an employee they'd send you a W-2, not a 1099.