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Lewes, Delaware
Jim's Towing Service
March 11, 2005     Cape Gazette
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March 11, 2005

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48 - CAPE GAZETTE, Friday, March 11 - March 14, 2005 How should independent contractors file federattaxes? An employer must generally withhold income taxes, withhold and pay Social Security and Medicare taxes, and pay unem- ployment tax on wages paid to an employee. An employer does not generally have to withhold or pay any taxes on payments to inde- pendent contractors. People such as doctors, dentists, veterinarians, lawyers, account- ants, contractors, subcontractors, public stenographers or auction- eers who are in an independent trade, business or profession in which they offer their services to the general public are generally independent contractors. Howev- er, whether these people are inde- pendent contractors or employees depends on the facts in each case. The general rule is that an individ- ual is an independent contractor if the payer has the right to control or direct only the result of the work and not what will be done and how it will be done. The earnings of a person who is work- ing as an independent contractor are subject to self-employment tax. People are not an independent contractor if they perform servic- es that can be controlled by an employer - what will be done and how it will be done. This applies even if they are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed. If an employer-employee rela- tionship exists, regardless of what the relationship is called, people are not an independent contrac- tors and their earnings are gener- ally not subject to self-employ- ment tax. to the Social Security and Medicare taxes withheld from the pay of most wage earners. The self-employment tax rate is 15.3 percent. The rate consists of two parts: 12.4 percent for Social Security (old-age, survivors, and disability insurance) and 2.9 per- cent for Medicare (hospital insur- ance). Only the first $87,900 of your combined wages, tips, and net earnings in 2004 is subject to any combination of the 12.4 percent Social Security part of SE tax, So- cial Security tax, or railroad re- tirement (tier 1) tax. For 2005, combined income is taxed up to $90,000. All combined wages, tips and net earnings in 2004 are subject to any combination of the 2.9 per- cent Medicare part of SE tax, So- cial Security tax, or railroad re- tirement (tier 1) tax. For 2005, combined income is also taxed at the 2.9 percent rate. Those who use a tax year other than the calendar year must use the tax rate and maximum earn- ings limit in effect at the begin- ning of your tax year. Even if the Continued on page 50 Self-employment tax Self-employment tax (SE tax) is a Social Security and Medicare tax primarily for individuals who work for themselves.- It is similar Job training Continued from page 47 tailor services to meet individu- als' needs. Protecting the rights of faith- based groups to help train and re- train workers - The bill "protects the rights of faith-based groups, willing to participate in the na- tion's job training system. Offering personal reemploy- ment accounts - The bill includes a proposal to create personal reemployment accounts of up to $3,000 to help unemployed Americans purchase job training and other key services, such as child care, transportation services and housing assistance as they strive to return to work. Improving Adult Education - The bill improves adult education by increasing focus on delivery of the basic skills of reading, writ- ing, speaking, and math; ensuring that instructional practices are based on scientific research; and increasing accountability for states and local providers to have measurably improved results in basic skills, GED graduates, and those entering higher education. Enhancing Vocational Reha- bilitation - The bill includes a number of provisions designed to strengthen the 1973 Rehabilita- tion Act in a continuing effort to help individuals with disabilities become employable and achieve full integration into society. I r PNC CHOICE HOME EQUITY LINE OF CREDIT VARIABLE RATE AS LOW AS % A PR* FOR LINES STARTING AT $150,000 1.01% BELOW PRIME FOR THE LIFE OF THE LINE OF CREDIT ::::::::::::::::::::::::::::::::: :.:.:,;.::: :::: :::::::::::::::::::::.+.:::::::::::::::::::::: :::  : .,:.*.x Fix your roof. Fix your bath. Fix your rate. PNCBANK 877-CALL-PNC Stop by any branch r=gu, m I - *Annual Percentage Rate (APR) accurate as of 3/1/05 and currently ranges from 4.49% APR to 5.99% APR for loan to valueup to 90%. Other rates and terms available for up to 90% LTV. Your actual initial APR will be based on a review of your credit application and the credit line amount. APR may vary thereafter. $150,000 minimum credit line and PNC Bank Choice Plane or Premium Plan relationship required for these APRs. "Prime Rate" means the highest prime rate published in the "Money Roles" section of The Wall TeetJoumalfor  last day atthe preceding col .erar month. Maximum APR is 18%. Closing costs may vary by market and may range from $21 to $138. In markets other than Philadelphia and New Jersey, there is an annual fee that ranges from $20 to $30. In Delaware, this fee is waived for the first yea. The annual fee is waived for Premium Plan e customers in all morkets. Properly insurance required, Offer may be modified or discontinued at.any time and may vary by market. As at 3/1/05,  Fixed Rate APR for the fixed rate portion moy range from 5.53%-7.62%. Your octual fixed rate APR will debased on a review of the initial credit criteria and LIV. This rate may vary, but once establishea for o new fixed rate pod it will not vary thereef. $100 balance Iransfer fee will apply each time you establish a fixed rate part. $5,000 minimum balance Jmnsfe to establish a fixed rote pad. PNC Bank Choice Plan e or Premium Plan e relationships required for those fixed rata APE's. 02005 The PNC Finonciol Services Group, Inc. Member FDIC.