Senior IT Consultant, NJ
“IAI has enhanced my success by relieving me of the...
We asked the accounting firm of Infeld Barr CPAs to create a tax return for one of our members, an iamindependent-employee (W-2) and then to create a tax return if this consultant filed as a self employed person (1099).
While the expenses for the iamindependent-employee (IAI member) are greater, the retained earning of the IAI member is 22% higher.
The worksheet starts with the $202,534.00 invoiced for both the member and the self employed person.
The non-reimbursable expenses are IAI's fee of $6,000.00, employer taxes of $6,696.00, employee taxes of $6,696.00, income taxes of $15,000.00 and the entertainment exclusion of $5,637.00 for a total of $40,029.00. IAI reimbursed the member for the IRS approved tax-deductible employee’s expenses of $103,464.00. The member’s total after tax retention is $59,041.00 (not including the retirement plan $8,753.00) or 80% ($59,041.00+$103,464.00)/ $202,534.00.
The self-employed person invoiced the same amount of $202,534.00. The non-reimbursable expenses are $10,276.00 for health insurance, self-employed payroll taxes of $14,723.00, income taxes of $19,774.00, and business expenses of $109,464.00 ($80,334.00 is tax deductible). The net amount retained is $48,297.00 (not including the retirement plan of $8,753.00) or 64% ($80,334.00+$48,297.00)/ $202,534.00.
The iamindependent-employee has retained $59,041.00 versus the self-employed person of $48,297.00 or an increace of 22%. Adding back the reimbursed IRS tax deductible business expenses, the iamindependent-employee has a retention rate of 80% versus 64% for the self-employed person.
Once you review this information, we have no doubt that you will be convinced.
Contact us today to start enjoying the financial benefits of our service.