>>Working as an independent, I pay the full 15% Social Security and Medicare. I believe the cutoff is $85,000. I also pay 10% self-employment tax.

Sorry, I made a mistake. Self-employment tax is Social Security and Medicare. Checking my tax forms, this year I paid 15.3% of my net business income as self-employment tax.

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>>Of course, as an independent, I can expense all my travel, depreciate all equipment/software, take home office deductions, office supplies, etc. I can also negotiate my hourly rate to make sure it covers all my additional costs. I've also worked on a retainer basis, where I'm guaranteed a minimum pay each month, whether I work the minimum hours or not.
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>Thanks for the info, Can you tell me more about the self-employement tax? When I look on the IRS site it sounds like the SS/Medicare tax. It has a current cutoff of $94,200 for 2006.
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For 2005, it's $90,000.

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>What is Self-Employment Tax?
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>Self-employment tax (SE tax) is a social security and Medicare tax primarily for individuals who work for themselves. It is similar to the social security and Medicare taxes withheld from the pay of most wage earners.