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What are the taxes for the self-employed in your country?
Thread poster: Alexander Onishko

Alexander Onishko  Identity Verified
Local time: 18:51
Member (2007)
Russian to English
+ ...
Sep 12, 2010

Luckily, Proz is a unique place where professionals from all over the world come together, so I would like to ask my respected colleagues what taxes (+ other obligatory payments) you are paying as an independent professional (self-employed person).

In Ukraine I we are paying now ~20 Euro as fixed tax, monthly + ~ 21 Euro as obligatory payment to the Pension Fund, monthly.

However, starting from the next year the situation my change and it will be 15% + 34,7% respectively.

Just incredible...

So, just wondering how the things are in your countries.


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LegalTransform  Identity Verified
United States
Local time: 11:51
Member (2002)
Spanish to English
+ ...
2010 tax rates for US Sep 12, 2010

As a single person, I pay 10% for the first $8,375, then I pay 15% on earnings from $8,375 to $34,000 and then I pay 25% on my earnings from $34,000 to $82,400. Anything over $82,400 (which as a translator I usually do not exceed this by very much) would be at 28%. This rate is valid until you reach $171,850 (maybe next year - LOL)




[Edited at 2010-09-12 20:38 GMT]


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Alexander Onishko  Identity Verified
Local time: 18:51
Member (2007)
Russian to English
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TOPIC STARTER
? Sep 12, 2010

Jeff Whittaker wrote:

As a single person, I pay 10% for the first $8,375, then I pay 15% on earnings from $8,375 to $34,000 and then I pay 25% on my earnings from $34,000 to $82,400. Anything over $82,400 (which as a translator I usually do not exceed this by very much) would be at 28%. This rate is valid until you reach $171,850 (maybe next year - LOL)




[Edited at 2010-09-12 20:38 GMT]


Thank you, Jeff!

But what about other compulsory payments? Such as medial insurance, pension fund?

[Edited at 2010-09-12 20:59 GMT]

[Edited at 2010-09-12 23:00 GMT]


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Patricia Rosas  Identity Verified
United States
Local time: 08:51
Spanish to English
+ ...
social security Sep 12, 2010

Alexander Onishko wrote:


But what about other compulsory payments? Such as medial issuance, pension fund?

[Edited at 2010-09-12 20:59 GMT]


I believe the only other payment is for social security. It used to be 15.2% of your net income, but last year I noticed it had dropped to (I think) 12.X%. Sorry, can't remember and I'm too busy to dig out the tax docs. Anyway, in the end, you pay and pay ...

Oh, and you get a deduction if you contribute up to $5K to an IRA (retirement fund); health insurance has nothing to do with taxes, but of course, most of us pay that, too...

[Edited at 2010-09-12 22:50 GMT]


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Henry Hinds  Identity Verified
United States
Local time: 09:51
English to Spanish
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USA Sep 12, 2010

Alex, it's really not as Jeff says, because first, there are several deductions that are made BEFORE getting to TAXABLE income where the percentages he mentions start to kick in. All that is too complicated to describe here, but suffice to say that if you only made $8,375 in one year, you would pay no INCOME TAX at all. And if you are married like I am, the figures are different.

What you must pay in addition to Income Tax and starting from the first dollar is Self-Employment Tax at the rate of 15.3%. That covers Social Security and Medicare. Only retirement-age people get benefits, so for instance, though I still have to pay tax on my work income, being almost 70 years old, I am now on the receiving end for pension and medical insurance benefits. It's very nice being on the receiving end.

That only covers Federal taxes. Of the 50 states in the USA, most also collect Income Tax as well, and even some cities such as New York City. I am fortunate enough to live in a state (Texas) that charges NO personal Income Tax.

The whole system is set up so in essence, being self-employed is really no different than being an employee. You are on an equal basis, except you do have to absorb what your employer would pay on your behalf, for you are, after all, your own employee and you employ yourself.

So when it is all said and done, move to Cameroon.


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LegalTransform  Identity Verified
United States
Local time: 11:51
Member (2002)
Spanish to English
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More on taxes Sep 12, 2010

Henry is right. I forgot about Social Security taxes. The good thing is that one-half of your social security tax is deductible from your taxable income. So if you pay $8,000 in social security tax, you can deduct $4,000 from your taxable income. You can also deduct 100% of your health insurance payment. As a result, I always pay more in S.S. tax than income tax.

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Gillian Searl  Identity Verified
United Kingdom
Local time: 16:51
Member (2004)
German to English
In the UK Sep 13, 2010

Basic rate: 20% £0-£37,400
Higher rate: 40% for income of £37,401-£150,000
Additional rate: 50% for income over £150,000

We also pay two types of National Insurance. Class 2 at £2.40 a week plus Class 4 at 8-9% of annual income.

Nothing else in compulsory but you can also pay private heatlh care and pension if you want.

Gillian


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Tomás Cano Binder, BA, CT  Identity Verified
Spain
Local time: 17:51
Member (2005)
English to Spanish
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In Spain Sep 13, 2010

Taxes here are complex, but after deducting your expenses as a professional (social security, utilities, operating expenses, employees if you have any), to give you an idea the levels of income and percentages for the income of 2008 were:
- First 17,707 euros -> 24%
- From 17,707 to 33,007 -> 28% (i.e. you pay 24% for the first 17K, then 28% on the rest)
- From 33,007 to 53,407 -> 27% (same system as above)
- From 53.407,20 -> 43%

So for instance you make 60,000 euros p.a., you pay 16,081 euros plus 43% of the difference between 60,000 and 53,407, i.e. 2.834 = 18,915, which is 31% of 60,000 euros.

Obligatory social security rate is 240 euros per month, but you can increase it if you wish, since 240 euros per month correspond to a pension of Eur 800 (less its deductions) when you retire. In Spain it is always a good idea to increase this rate and have one or several private pension funds.

You can have deductions for the purchase of your first (normal) residence, up to 15% of your annual payments but with a limit; the same with private pension plans, in which you can deduct a maximum of 10,000 euros p.a.

All this usually changes every year, so over here it is always a good idea to hire a tax advisor.


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Krzysztof Kajetanowicz  Identity Verified
Poland
Local time: 17:51
English to Polish
+ ...
Poland Sep 13, 2010

Social security:

a minimum* of approx. EUR 140 per month in general, or
a minimum* of approx. EUR 30 per month for the first 24 months.

Medical tax: EUR 60 per month.

Income tax - you can choose to pay:

19% of your income (after deducting your costs & social security) minus most of the medical tax, or:

nothing on EUR 800, 18% on the EUR 21,000 in excess of that, 32% on anything in excess of EUR 21,800, minus most of the medical tax.

*A "minimum" meaning that you can choose to pay more towards your disability and pension insurance.

The medical tax is officially called "health insurance" but it's really a tax because you can hardly count on the availability of public health care (and you cannot opt out, obviously).

[Edited at 2010-09-13 05:27 GMT]


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Williamson  Identity Verified
United Kingdom
Local time: 16:51
Flemish to English
+ ...
The tax-misery index. Sep 13, 2010

www.taxrates.cc . Don't know if Forbes tax-misery index 2010 has already been published.
Year after year France wins the "Gold" medal, the "Silver" medal changes (now its China) and the bronze medal goes to Belgium year after year.
Fortunately, there are some highly developed countries on this earth were the rate is 0%.
Since nobody wants to pay taxes, real-estate in those places is expensive.
Another means to pay less is "financial engineering".



[Edited at 2010-09-13 07:24 GMT]


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Samuel Murray  Identity Verified
Netherlands
Local time: 17:51
Member (2006)
English to Afrikaans
+ ...
South Africa: zero Sep 13, 2010

Alexander Onishko wrote:
In Ukraine I we are paying now ~20 Euro as fixed tax, monthly + ~ 21 Euro as obligatory payment to the Pension Fund, monthly.


Freelancers don't have to pay anything in South Africa, except the usual income tax.


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Alexander Onishko  Identity Verified
Local time: 18:51
Member (2007)
Russian to English
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TOPIC STARTER
Sam, be serious :) Sep 13, 2010

Samuel Murray wrote:

Alexander Onishko wrote:
In Ukraine I we are paying now ~20 Euro as fixed tax, monthly + ~ 21 Euro as obligatory payment to the Pension Fund, monthly.


Freelancers don't have to pay anything in South Africa, except the usual income tax.


Hi, Sam, just be serious - you pay the usual income tax - can you just kindly tell us the rate? Also, supposedly you are also paying some social security or medical insurance?


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