I’m new to freelancing and just got my first pay check. I’m on payroll at an agency in New York for the duration of my freelance contract. They took out around 30%. Does that sound more or less right?

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It depends I usually get between 30-40 taken out depending on the size of the check and the assumptions the payroll software makes about what my yearly salary will be. So smaller checks are around 30 and bigger ones around 40

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Recommend switching it to a 1099 but ONLY if your disciplined with setting aside about 30% for taxes. Being able to deduct expenses is a huge life saver

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Yeap on a W-2 you get taxed like any other employee. On a 1099, you get paid in full and you deduct your own taxes.

Ok thanks! And the rate sounds right to you? At my old job they took almost 40% out of my paycheck (although that was including health insurance, 401k etc). So actually 30% seems on the low end for me. Want to make sure I don’t have to pay a ton of taxes next year!

If you filled out your w4 honestly when you started, then the taxes are accurate. Enjoy!

Yep. For future gigs, remember you have some flexibility on your W4, too. There are some things you can claim or not claim that will either err on the side of a little or too much or not quite enough. So if your cash flow is tight, claim as many things as you can. If you dread writing checks in April, claim as few as possible. It’s not a ton of leeway but there is a little .

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