For many reasons I am moving from full time employee to a contractor with an associated company in a different city. Everyone I have spoken to says contracting is great except for the taxes and lack of benefits. I have never contracted for any company before.
From what I can gather the most important thing to do when changing over is to take careful note of your expenditures and "write off" what you can at the end of the year. My contract would be in Washington state, USA.
1) I am married and have 2 dependents, will I still be "nailed" on taxes or will there still be tax breaks?
2) What are the most important things tax wise I need to keep in mind for taxes with this transition?
3) What percentage of my "salary" should I expect to save for end of year taxes? From what I have read I want to save 30% to be safe?
4) Are there any good tips or tricks? Can I write off relocation costs, or if i have a home office can part of my rent be tax deductable?
5) Would it be wise to adjust my consulting rate to compensate for additional taxes, even if cost of living in the new city is lower?
Thank you for any answers.