Question by Sunny: Independent contractor tax question!?
My husband works full time & I stay home with my 15 month old baby. I’m a teacher & I found a part time job as an independent contractor at an art academy. I did some math & I would be making about $ 1000 a month but I need to pay for the baby sitter & the gasoline. so I may end up with $ 750 – $ 800 pure income?
I have no idea how tax works. $ 1000 a month sounds good but if I’m paying lots of tax then I don’t think it’s worth it to take my baby to the sitter & work. I’m afraid that filing tax for me will make a difference on my husband’s tax return – ending up paying more tax from his salary? because I’m not a stay home mom anymore. I read independent contractor tax info page which I really don’t understand much – all the payments such as self employment tax & income tax sounds scary.
Do you think it’s worth it? How much tax do you think I’ll be paying? How much income do I get monthly after the tax & what about my husband’s tax? I don’t want to mess up his tax return. I love teaching so I’d like to do it but I don’t want to be away from my daughter if I’m not making enough money after the tax & fees.
Please help me understand the tax issue for independent contractor.
I was wondering about the number my hubby put for tax withheld? Is it what they call it? He puts 7 but it may have to be adjusted down? Which means he gets his salary less than we receive. It will make a problem on our monthly payments.
Answer by v b
The only way to truly know would be to do some mock tax returns (say last year’s forms and add in $ 1000 a month).
You can’t deduct the cost of babysitting, except as the child care credit (see form 2441). You can’t deduct gasoline if you only visit on client in a day.
So, let’s use $ 1000 a month. That’s could be around 30% in taxes (15% for SE tax and 15% for income tax). It could be lower if your husband doesn’t make much. It could be higher if he’s got a high income. And, yes, if you qualify for EIC now, it could cause you not to qualify anymore.
What do you think? Answer below!