Prepare to pay self employment taxes when using work at home to earn. Budgeting for jobs at home isn’t just something to do at the end of the year as tax time looms -- it’s an ongoing process that’s necessary for successful self employment.
Using jobs at home to make a few extra bucks, or an entire living? Either way, there’s no way to escape paying self employment taxes. Find out how to use proper budgeting to lessen the work at home burden.
Self Employment Taxes
So, who has to pay for self employment taxes? Independent contractors, subcontractors, freelance professionals, even moms who work at home are all responsible for self employment taxes as well as income taxes. Professionals who earn income either through work at home or some other self-based effort must claim this money with their federal government. Those who qualify as being self employed have to pay an extra tax on top of that.
Who has to pay for self employment taxes? The self employed. If that sounds like a wide umbrella, that’s pretty much the idea. By definition, anyone who works in the U.S. as an owner of any sort of business or falls under the definition of independent contractor is self employed -- and therefore must pay self employment taxes. Earning income through jobs at home? Start budgeting for tax time - and keep it up all year ‘round.
Budgeting for Jobs at Home
The self employment tax is a little tricky. To figure up the amount owed, multiply the net income earned through self employment over the course of the year by 92.35%. Next, multiply the net earnings by 15.3% to figure out the cost of self employment taxes. Sound confusing? Roughly, this works out to approximately $14 per every $100 earned (depending upon income bracket). Remember, the self employment tax is an extra tax - this amount doesn’t count toward regular income taxes which must also be paid.
When budgeting for jobs in home, keep in mind that self employment taxes, as well as income taxes, must be paid at least once a year. Some professionals choose to make monthly, biannual or quarterly payments to help lessen this financial burden. When good budgeting is in place, however, paying the self employment tax can be very simply managed. Simply remember that for every hundred dollars earned, at least fourteen dollars must go toward taxes. Put at least this much aside every time money is received and save it up. Eventually, tax time will come around. It’s much better to be prepared to pay self employment taxes than to have them come as a surprise.
 |
