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Comment by viggity | Hacker News Reader

Try contracting. Seriously. Go to a local user group and talk with people who contract and see what the going rate is in your area. Its probably 2x to 2.5x of what you're getting now.

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Though you have to pay your own taxes -- probably 30%, in the end -- and your own medical.

You pay your own taxes now.

In the US, there's a Social Security payroll tax (previously 12.4%, now 10.4%) that's split between employer and employee. Self-employed people pay it themselves; their clients don't.

I think what he meant was that you have to consider a hefty tax burden come April 15 because, as a contractor, you don't get taxes taken out of your paycheck. This is where having a good accountant and knowing what expenses you can deduct comes in (to reduce your taxable income).

If for nothing else, you should have a business just so you can claim more expenses and reduce the amount you have to pay Uncle Sam (from my understanding, all you need to have is a profit motive -- not necessarily profits).

My tax guy always tells me: the US hates employees. There are more loopholes if you contract or (even better) have your own business (which could be a contracting business).

Plus you don't get taxed at source so you can take that extra 30%+ you get each paycheck to pay a tax person to figure this all out for you in time to save up for the tax hit at the end of the year.

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