Anybody here ever do contracting?

[geoint]

So Ive been out about a year and a half ago and I had offers to go into contracting right when I got out but I didn't want to deploy again and risk more friction with the wife so I turned them down. Now Im divorced and my parents/Ex are willing to watch my kids if I take a job contracting back east where Ill spend about half my time downrange and half stateside (maybe more downrange if I can really hustle)


Anybody have any tips for contractors downrange?


And no this isn't blackwater operator type contracting, I do super boring intel crap.

[Abu Riyah]

I've been working OCONUS intel gigs in Iraq and Afghanistan since 2010 and just came back a little over a month ago. My advice is to find a gig with 100% OCONUS deployment for at least a year and preferably for 18 months for maximum tax benefits. There are several details and specifics, but basically:

1) For federal taxes, you can exclude the first $100,800 from your taxable earnings as long as you are abroad for 330 days out of a 365-day period. That amount is for 2015 and will probably go up a bit for 2016.

2) For California state taxes, it is all taxable unless you are out of the state for 546 consecutive days, minus up to 45 days that you can come back to the state during that period (for vacation). If you can do that, then all the OCONUS earnings are non-taxable.

That 6-mo. CONUS + 6-mo. OCONUS gig will most likely get you zero tax benefits.

[geoint]

Interesting. I thought anything earned downrange was automatically untaxed up to whatever the limit was.

As far as CA income tax, I would be changing my residency to North Carolina for multiple reasons (guns, CCW, taxes, vehicle registration/insurance, to try to keep a purple state red, peace of mind..etc)

[Abu Riyah]

It's definitely not an automatic thing. You first have to "make your 330" which is actually a kind of sliding window that moves across tax years. Once you qualify that way, then the exemption applies, in full for years that you are OCONUS for the entire year, and prorated down to the day for partial years. It's a little confusing how the the 330 is not static and you will have different 330-day periods for different years that overlap each other. The IRS has a couple of publications with diagrams that explain it fairly well.

I'm no expert on NC state taxes, but I think they have a simple 6-mo per calendar year physical residency test that determines whether your earnings are taxable or not. Each state does their own thing with overseas earnings.

Still, if you end up going with the 6-in/6-out, you're probably going to be taxed on everything with no exemptions. You should probably consult with your attorney or CPA to determine what your tax liability will be before you agree to anything. If you don't get any tax benefits due to the short deployment periods, you may want to consider negotiating a different compensation package.

All of this is assuming that you are not going to be an actual 1099 contractor, but rather a W-2 employee of a contractor company. The "contractor" term gets thrown around a lot, but 99.99% of us are not contractors at all...the company is the "contractor" and we are just "employees." The government is the "customer."

Another issue, unrelated to taxes...be sure to ask about medical and life insurance coverage while OCONUS. Some companies will get you good, international-coverage policies and may even pay the premiums for you...others may not.

[Snoopy47]

I had a 35F mos friend do the contracting thing.

They sent him to the east coast for 4 months, and then 8 months in AFG.

It paid him $120Kish.

Then they cut back, and offered him $60K to do another stint (you end up getting more than that as a soldier while deployed).

So just be ready for the pay levels to fluctuate wildly.

[Abu Riyah]

That's a good example of where the tax situation sucks...4 mos. in/8 mos. out and he had to pay taxes on the whole $120K. If he could have stayed in AFG for 11 mos., he would have been paying taxes on $20K. It actually would have been higher since he would have gotten more months of OCONUS uplifts on top of the base salary, but you get my point. Those shorter deployments can have some advantages, but not when it comes to taxes.

Unfortunately, intel analysts are not in high demand since there are so many of them in the job market now. That's why they're getting those low salaries now. There are still decent intel gigs to be had, more so for SIGINT, DOMEX, Biometrics/Identity Exploitation, and a few others. Those specialties have seen big drops in pay too, but you can still get around $200K...certainly not on every contract though.

[geoint]

That's a good example of where the tax situation sucks...4 mos. in/8 mos. out and he had to pay taxes on the whole $120K. If he could have stayed in AFG for 11 mos., he would have been paying taxes on $20K. It actually would have been higher since he would have gotten more months of OCONUS uplifts on top of the base salary, but you get my point. Those shorter deployments can have some advantages, but not when it comes to taxes.

Unfortunately, intel analysts are not in high demand since there are so many of them in the job market now. That's why they're getting those low salaries now. There are still decent intel gigs to be had, more so for SIGINT, DOMEX, Biometrics/Identity Exploitation, and a few others. Those specialties have seen big drops in pay too, but you can still get around $200K...certainly not on every contract though.

Oh I know. I hate myself every day for going into IMINT instead of SIGINT