Employee:
(1) federal income tax withholding:
10% to 35% from paycheck; employer remits to U.S. Treasury
IRS Form W-2
(2) state income taxes (2015 rates):
Delaware: 2.2% > $2,000 to 6.6% > $60,0000 of DE. wages
Pennsylvania: 3.07% flat rate on wages
New York: 4.0% > $0 reaching 8.82% > $1,029,250
New Jersey: 1.4% > $0 reaching 8.97% > $500,000
(3) City wage taxes (2015 rates):
Wilmington: 1.25% on earned income
Philadelphia: 3.92% flat rate on wages (residents)
New York: 2.907% to 3.876%
(4) Employment taxes:
Social Security: 6.20% employee; 6.20% employer = 12.4% total
up to "annual wage base" = $118,500 in 2015
($7,049 maximum)
Medicare: 1.45% employee; 1.45% employer = 2.9% total
no limit on annual wages
workers compensation insurance:
6.2% of employee's FUTA wages
(5) Benefits: not required, but no discrimination (based on income)
(6) Federal Employment Law:
no discrimination based on sex, race, ethnic origin, age
minimum wage: $7.25 per hour since 2009
(state minimum wage may be higher:
$7.75 in DE and $9.47 in State of Washington)
Family and Medical Leave Act of 1993: 12 weeks unpaid leave
Fair Labor Standards Act of 1938: overtime for hourly employees
(7) Work-Product: produced within "scope of employment" belongs to employer
Independent Contractor:
(1) federal income tax:
quarterly estimated taxes on IRS Form 1040-ES
principal files IRS Form 1099-MISC
taxed on profit (loss) from business based on type of entity
reports net profits on IRS Schedule C
(2) state income taxes:
taxed on profit (loss) from business based on type of entity
(3) city net profits taxes:
taxed on profit (loss) from business based on type of entity
(4) Employment taxes:
depends on type of entity
(5) Benefits: none; must buy own (deductible by business)
(6) Work-Product: work product "within the scope" belongs to principal