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| *Loan,banking and credit>>>income tax |
I am self employed. What percent of my income will with be taken from me in taxes at the end of the year? |
I am thinking of taking a Nanny job at $15/hr for 55 hrs per week. Without taxes this is pleanty of money, but I am worried about how hard I will be hit when tax time rolls around. First, you need to decide what your ethics are and your feelings towards the IRS. If you decide you're going to evade taxes (which is illegal by the way), you simply don't report any income or file any tax returns. If you want to operate as if you were a legitimate business, then it's a different story and I'll explain things for you in general terms. Your exact tax depends on many specifics which you have not mentioned as part of your question, so I'll do the best I can with the information you provided... $15 per hour X 55 weeks X 52 weeks in a year gives you an annual income of $42,900. Assuming you are single, your federal tax rate on that would be $7,282.50. Now you need to pay self-employment taxes which would be 15.3% which comes to $6,563.70. Furthermore, you will need to pay State Income taxes. I don't know which state you live in, so I don't know what your tax rate would be. Let's review so far. Your income starts off at $42,900, but after you pay $13,846.20 in federal taxes, you're actual take home pay is now $29,053.80 which comes out to $10.16/hour. Here's what I didn't consider: State Income Taxes Income Tax Deductions (will you itemize or take the standard?) If you take a standard deduction of $5,000 (for being single), you will regain $1,250. So that bumps up your income to around $30,000/year at 55 hours/week. So, if you want me to figure this out in anymore detail, you'll have to let me know. But as a rough estimate, figure you'll keep about $30,000 of the $42,900 give or take $5,000 depending on your specific tax situation (assuming it's not unusual). Source(s): http://www.irs.gov/businesses/small/arti... http://www.irs.gov/businesses/small/arti... I think it's about 15% if you make under $90,000 and if you make over $90,000, you only pay taxes on the $90,000. But if you made under $400 on that job then dont' worry about paying taxes. Keep records of all your expenses so you can deduct them. Your travel, uniform, etc. can be deducted. I am guessing 28% If the person hiring you wanted to do this legally, they would hire you as an employee as the IRS requires. Have them go to IRS.gov and search for "Household Employees". If you are working for one family and putting in 55 hours a week, technically, you are not self-employed, you are their employee. The IRS rules are pretty cut and dry on this. If you make $43,000 for the year, and are single with no dependents, no other income and no adjustments or itemized deductions, you'd pay about $5200 in income tax plus 15.3%, or $6579, in self-employment taxes. If you have deductible expenses, that could reduce both of these tax figures. Depending on where you live, there might also be state and local income taxes due. If you got a job as an employee making the same money, the only difference in taxes would be that you'd only pay half of the total social security amount. So you'd need to make $13.85 an hour as an employee to make the same net. But then you couldn't deduct expenses either. One other issue - the IRS makes the rules as to who is considered self-employed and who is considered an employee. If you're working as a full-time nanny, you'd most likely meet the criteria for an employee, not a self-employed independent contractor. |
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