mass tax (contractor, income, taxes)

[burlangel]

I am a independant contractor, I just did a job with a friend worth $7200, the check was made out to him, so he cut me a check but withheld the tax $500. is this a fair amount to cover his tax requirments, he makes around $60,000 per year if that helps.

[LeavingMA]

I'm also an independent contractor and I think he should have not taken out any money for taxes. You should have gotten X amount and then claimed that amount on your taxes when it is time to pay your taxes.

I get paid in full every paycheck and then get a 1099 at the end of the year. Then when you do your taxes I always owe money.

[hardwork12]

If you are saying that you will pay no taxes on the amount he sent you and he will pay the taxes on the full $7200 then he will have to pay on the 1099 income (I hope I got these rates right):

25% Federal Tax (2006 rate for 60K)
5.3% State Tax MA
15.3% FICA (self employed he can deduct 50% as an itemized deduction however)

All told then the taxes on the $7200 would be around $3283-371(tax deduction on 50% FICA) = net taxes of $2912 looks to me like you got a good deal if I understand your question correctly. This also assumes he itemizes deductions.