What ? I've never heard of a scenario where you get less money after tax as a contractor vs employee, even without doing things like claiming a bunch of everyday expenses on your business (like a car, home office rent, equipment, etc.)
It’s called self-employment tax: https://smartasset.com/taxes/self-employment-tax
It’s not actually a separate tax. Normally your employer pays these taxes but you don’t see it. When you are a contractor you are self-employed, so as an employer of yourself you have to pay these taxes like any other employer.
Some people play games with certain corporate structures where they pretend they’re only worth a fraction of what they’re getting paid and then they extract the rest as dividends. It’s one of those tax tricks that works as long as nobody ever looks to closely at your tax returns, but if you’re caught you have to pay it back plus penalties.
The trick discussed by the parent pertains to S-corporations, which allow you to take distributions as long as you pay yourself a reasonable salary
It's perfectly legal though, not a matter of oversight.
Countries like the UK are now closing these and other loops with IR35 but you can still do that in many places.
You also have the option of not taking money out of the company and use your company to invest your own money, paying up taxes only on the money you need to support your lifestyle.
When you're done living where you're living you can also opt for a stop in Dubai or Portugal with NHR, to withdraw the profits as foreign dividends tax free.
How is that a tax trick ? Pretty much anyone owning a company pays himself a tax minimum and extracts the rest through profits, etc.
Rule of thumb I've heard is 50% wages 50% profit, up until $100k wages, beyond which you can really start milking the profit.
https://www.irs.gov/businesses/small-businesses-self-employe...