Author Topic: Hourly pay or hourly pay with mileage  (Read 632 times)

freedom8991

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Hourly pay or hourly pay with mileage
« on: June 11, 2018, 04:44:30 PM »
Hi

I have been offered a contract to do some work that I absolutely enjoy doing.  I have two options to chose from as it relates to payment and am struggling with which one to choose.

Option #1  $75.00 per hour for onsite work/paperwork and travel
or
Option #2   $75.00 per hour for onsite work/paperwork and $15.00 per hour for travel and .52 cents per mile reimbursement

Generally most of the sites are about 35 minutes from my home office.

Could someone help me figure out which option is the best?

Thank you!!!

FireEngineer

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Re: Hourly pay or hourly pay with mileage
« Reply #1 on: June 11, 2018, 04:51:33 PM »
Assuming a speed of 60 mph:

Traveling 35 miles [*.52] about 18 dollars.
18+15 is much less than 75 dollars.

You would need to sharpen your pencil and check on the tax rate which would apply [SE tax as a 1099 contractor could add up]

The 18 dollars of travel reimbursement should be tax exempt, but you should be able to claim a deduction on the unreimburaed milage at the 75/hr rate.
« Last Edit: June 11, 2018, 04:54:46 PM by FireEngineer »

terran

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Re: Hourly pay or hourly pay with mileage
« Reply #2 on: June 11, 2018, 09:50:06 PM »
For every hour of driving you'd have to make up the $60 difference in hourly rate, which means you'd have to travel 60/.52 = 115 miles per hour.

It's possible the mileage would be reimbursed, but not taxed in which case you'd multiply the numerator by 1 minus your marginal tax rate. You'd have to be at something like a 44% marginal tax rate to make break even possible at a 65mph average speed. If it isn't taxed it probably wouldn't be subject to FICA, state, or federal taxes, so you'd need to look into that.

I'd say unless you have a pretty high income you're probably better off taking the $75/hour.