US indie contractor - how much would I take home from 120k salary + 10k bonus? Total tax noob here

You'll definitely take home less than someone with a W-2 job making the same amount, but you shouldn't take home less overall with such a significant pay increase. The main difference is you'll be responsible for both halves of FICA taxes (Social Security and Medicare) - about 15.3% on the first $160,200 of earnings. With a W-2 job, your employer pays half of that. You'll also need to make quarterly estimated tax payments since taxes aren't withheld. The good news is you can deduct legitimate business expenses - home office (if you have dedicated space), equipment, software subscriptions, internet (partial), professional development, etc. Setting up an LLC can provide liability protection but doesn't change your tax situation unless you elect S-Corp status, which might save on SE taxes once you're making enough. I'd recommend setting aside roughly 30-35% of your income for taxes to be safe. Working with a CPA who specializes in self-employment would be worth every penny in your situation.

After struggling with my first year as an independent contractor and seriously overpaying taxes, I stumbled upon https://taxr.ai and it completely changed my approach. I was in a similar situation - went from corporate to contractor with a higher gross but was shocked at how much I was losing to taxes. The tool analyzed my situation and helped identify deductions I didn't know existed. It also guided me through setting up a proper bookkeeping system so I could track business expenses efficiently. The best part was getting clarity on what percentage to set aside for quarterly payments - I had been setting aside way too much before.

I was really skeptical about specialized tax tools, but I gave taxr.ai a try after seeing it mentioned here. My situation was so similar to yours - went from $92k W-2 to $125k contracting. The difference was huge! It caught several deductions I would've missed completely - like partial internet/phone costs, professional subscriptions, home office deduction, and even some travel expenses for client meetings. Ended up saving around $7,300 compared to what I would've paid without optimizing. The quarterly payment calculator was what really made it worth it though. I was way overpaying initially, basically giving the government an interest-free loan. Now I keep more cash flowing throughout the year while still staying compliant.

When I first became an independent contractor, the worst part wasn't even figuring out the taxes - it was trying to GET SOMEONE at the IRS to answer my questions! Spent literal hours on hold multiple times and kept getting disconnected. Finally found https://claimyr.com which got me connected to an actual IRS agent in under 30 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c - basically they navigate the phone tree for you and call you when they've got an agent on the line. Used it to clarify some confusing rules about home office deductions and what counts as "ordinary and necessary" business expenses. The agent was surprisingly helpful once I actually reached a human!

I need to eat my words and apologize. After being super skeptical about Claimyr in my earlier comment, I decided to give it a shot last week when I was desperate to resolve an issue with my estimated tax payments. Holy crap it actually works exactly as advertised. I got a call back in about 25 minutes with an IRS agent already on the line. Resolved my question in another 15 minutes. Previously I had wasted THREE SEPARATE MORNINGS trying to get through the normal way. For anyone newly self-employed like the OP - this service is legit and will save your sanity when you inevitably have tax questions that only the IRS can answer.

Some practical advice from someone who's been an indie contractor for 7 years: 1. Immediately open a separate business checking account and business credit card. Keep ALL business transactions separate from personal. 2. Track EVERYTHING. Every mile driven for business, every coffee with a potential client, every subscription, every piece of equipment. 3. Pay quarterly estimated taxes ON TIME to avoid penalties. I use a separate savings account and transfer 30% of each payment I receive. 4. A good CPA will likely save you more than they cost. Interview a few who specialize in self-employment. 5. Consider a SEP IRA or Solo 401k - you can contribute WAY more than with a regular 401k, which offsets some of the self-employment tax pain.

The others gave good advice on the tax side, but the critical thing I learned about contract work: GET DISABILITY INSURANCE. Like yesterday. When you're an employee, you probably have some short/long term disability coverage and workers comp. As an indie, if you get sick or injured, you get $0. Disability insurance is expensive but without it, one bad accident could financially ruin you. Same goes for health insurance if they're not offering benefits. The marketplace plans might be more expensive than you're used to with employer coverage.