any tax professionals ?

[amy-momofthree]

I am a stay at home mom of 3.

I am considering taking a part time online job writing articles.

Can anyone tell me how this would affect my taxes? Dh claims me and kids and is HOH. We live in TN. I read that I have to pay a self employment tax ?Anyone know how much that is? I am getting different amounts when I look it up.

If I do this, would I be able to deduct internet costs on my taxes? Internet is required to do this "job".

Any other helpful tips? Or can you help me figure out how much I would pay?

This job wouldn't be a lot of money just to make some Christmas money or add to the vacation fund.

Thanks for any insight

 

[soonerfan2008]

Not a tax professional, but a freelance writer. About 25% of my income goes to taxes. Hope that helps!

ETA: Yes, you can take a few deductions, however if you do it legitimately (which I know a lot of people do not do when they are self-employed), you really cannot write off very much. For example, will you have a home office dedicated SOLEY to your writing? Will you have a separate internet service SOLELY for the use of your writing. Probably not. And I can tell you from personal experience that being audited is not fun, and you must prove your deductions very carefully. My records were very careful and clear, but I cannot imagine how much more arduous the process would be if they had not been.

 

[PatsMom]

Regarding the self employment tax - it is really just the employer's portion of the social security tax. For an employee, the employer matches all of the contributions. You have to pay this matching contribution yourself since you are self employed. You are allowed a deduction on your income tax for the self employment portion of your social security taxes.

When taking deductions, be careful. As mentioned, they can be audit red flags. Your home office has to be dedicated, your internet has to be dedicated. It is generally not really worth it.

 

[mrsklamc]

Highly unlikely to find a practicing tax pro that has time to be on the DIS this time of year.How much of your income goes to taxes would depend on your income level though; our accountant says for DH to put aside 30% of his contract earnings, and we needed it this year!

 

[Diegosmom]

My husband is self employed and we write off part of the internet (I do use it for personal, I think we write off 25% of the internet). We do not write off the home office because we use it for personal use and I store stuff in that room. We write off his cell phone cause we have personal phones. I can't give you a percentage on the self employment tax but I know for social security when you work for someone they pay half and you pay half. When you work for yourself you have to pay 100%. Also if you are now working you could write off some child care expenses. This could also be a summer camp. It is a certain percentage and you have to make a certain amount but it is something.

BTW I am not a tax person but just what our CPA told us we could claim.

 

[Jax1023]

I do freelance nutrition anaylsis and am payed as 1099 contractor, which is what this would be.

First, you have to pay self employement tax on it, which is basically both halves of medicare. This year is was 15.3%. If you itemize taxes, you can deduct 1/2 of your self employment tax on your schedule A.

Also, there is no tax withholding, so you need to pay all income tax on that money. This will vary based on your income tax bracket.

If you make less than $400 dollars, you do not have to pay self employment tax.

As far as writing off things like and office, internet etc. It is supposed to be solely dedicated to doing that job. Meaning if you only had internet for this job, then yes, otherwise no. Lots of people ignore this, but I'm not comfortable risking tax issues over a few hundred dollars. Also if you claim a home office, it has tax implications if you sell your house.

I file quarterly tazes to avoid fees, and it helps with budgeting, but this is a significant source if income for me. If your only making a few thousand dollars, you probably dont need to do that.

 

[prncess674]

IDh claims me and kids and is HOH.

Big 4 tax accountant here.

Actually you are married filing jointly, MFJ. The only way to file HOH is to be unmarried.

There are way too many unknowns here to give you an accurate idea of what your tax liability would be. More than likely you will be a 1099 contractor and a good idea is to put away 1/3 for taxes till you see at the end of the year where you end up tax wise. If you use TurboTax you can go in and a make of copy of your current return and add in what you think you would make freelance and see what the tax difference would be. Remember you need to look at the difference in your tax liability, not your refund/tax due with filing.

 

[amy-momofthree]

Big 4 tax accountant here.

Actually you are married filing jointly, MFJ. The only way to file HOH is to be unmarried.

There are way too many unknowns here to give you an accurate idea of what your tax liability would be. More than likely you will be a 1099 contractor and a good idea is to put away 1/3 for taxes till you see at the end of the year where you end up tax wise. If you use TurboTax you can go in and a make of copy of your current return and add in what you think you would make freelance and see what the tax difference would be. Remember you need to look at the difference in your tax liability, not your refund/tax due with filing.

Ah, see? That is why I need advice. I just assumed HOH meant "only one working". We actually have an accountant who files our taxes for us so I don't understand the different terminology

I should have asked the accountant when we were there two weeks ago.

Thanks everyone! I am just trying to figure out if this little income may be more trouble than it's worth.

 

[Cheshire Figment]

I would also suggest going to www.irs.gov and order the following publications which will probably help a lot.

334 - Tax Guide for Small Business (For Individuals Who Use Schedule C or C-EZ)
463 - Travel, Entertainment, Gift, and Car Expenses
535 - Business Expenses
551 - Basis of Assets
552 - Recordkeeping for Individuals
560 - Retirement Plans for Small Business (SEP, SIMPLE and Qualified Plans)
583 - Starting a Business and Keeping Records
587 - Business Use of Your Home
946 - How to Depreciate Property

And also, if the time can be spared and at and minimal cost take a first semester Principles of Accounting course at a local Community College. Not necessarily to keep the books, but to get an understanding of what the business is doing.

Note that most small business fail within the first few years not because the owner did not know his subject but because they did not understand the accounting.

Mike (CPA Retired)