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  1. #1
    carpe damn diem billy007's Avatar
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    12.10.17 @ 03:50 PM
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    Default Question for any tax gurus out there

    Why does miscellaneous income that my wife earned on a private contracting job of $5977 (and it should only be $5300 I think as they added in her expenses) cause our refund to drop by $1677? Yeah, they didn't take taxes out, but my estimate is that even if they did it only would've been around $500-$600 - so why a drop of almost $1700?

  2. #2
    Little Dreamer BSE's Avatar
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    08.30.17 @ 06:31 PM
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    Based upon the info. you provided, does her income show up on a Schedule C? If so, at the bottom of the page there is a self employment tax of roughly 15% that is levied on the income. The net profit then shows up on the 1040 and then has federal tax levied on it. Feel free to contact pm me if you need some additional help.

  3. #3
    Atomic Punk Dave's Dreidel's Avatar
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    Quote Originally Posted by BSE View Post
    Based upon the info. you provided, does her income show up on a Schedule C? If so, at the bottom of the page there is a self employment tax of roughly 15% that is levied on the income. The net profit then shows up on the 1040 and then has federal tax levied on it. Feel free to contact pm me if you need some additional help.
    Correct, many people forget about the self employment tax when figuring their tax bill.

    It is 12.4% Social Security (6.2% employer, 6.2% employee, but you pay both halfs). Up to the first $106,800 in earned income per spouse if filing jointly.

    Then 2.9% Medicare (1.45% employer, 1.45% employee). This is for every earned dollar made.

    Part of the Tax Act of 1986. Before that, you only had to pay the employee half, but now you half to pay both.
    Taylor Swift is nice to look at. Adele can sing.

    Emperor Brett - "I can't believe you guys are analyzing song-by-song Van Halen III? What next, analyzing the script of Stroker Ace looking for some shred of Citizen Kane?"

    David Lee Roth did the impossible. He made Van Halen better. Deal with it!

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  4. #4
    carpe damn diem billy007's Avatar
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    It's on a 1099-MISC. Even at 15.3% (which is what 12.4% and 2.9% add up to), that's only 900 bucks - not close to $1700.

  5. #5
    Baluchitherium Mikey Metalhead's Avatar
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    Im no expert by any means, but I belive its what the last two have said combined. I worked contract for a short term when I first came back to Texas and the tax rate is about 30% for self employed.

    However, generally, there is a butt load self employed can write off.
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  6. #6
    carpe damn diem billy007's Avatar
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    I think that's where the problem lies is it's considering her as self employed, but it was really only a one-shot deal - a couple of weeks she worked for a site when her current employer had no work for her (and with her, no work=no pay). Just shows how the system blows, though. They could've paid her under the table and the IRS gets nothing, but you try to do the right thing and be honest, and you get screwed.

  7. #7
    Eruption donkost's Avatar
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    12.09.17 @ 08:16 PM
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    Quote Originally Posted by billy007 View Post
    I think that's where the problem lies is it's considering her as self employed, but it was really only a one-shot deal - a couple of weeks she worked for a site when her current employer had no work for her (and with her, no work=no pay). Just shows how the system blows, though. They could've paid her under the table and the IRS gets nothing, but you try to do the right thing and be honest, and you get screwed.
    Live and learn... now you know your future tax strategy if this situation ever occurs again. The government (Democrat or Republican) doesn't think twice about pissing away your tax money on pork barrel projects or unnecessary foreign wars.

    I'm in a similar situation, long-time TurboTax user and always on top of my tax situation. I projected to break even or just pay in a little bit of money (never want to give these jokers an interest-free loan all year), and right now I'm stuck at owing $729. I'm in IT but I'm looking at going Schedule C to write off guitar equipment purchased during the year even though I had no income from music. I am looking to get back into cover band playing at some point so I've been ramping up equipment purchases. I'm also maximizing donations, making sure I didn't miss anything.

  8. #8
    Atomic Punk Menlow's Avatar
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    Quote Originally Posted by billy007 View Post
    I think that's where the problem lies is it's considering her as self employed, but it was really only a one-shot deal - a couple of weeks she worked for a site when her current employer had no work for her (and with her, no work=no pay). Just shows how the system blows, though. They could've paid her under the table and the IRS gets nothing, but you try to do the right thing and be honest, and you get screwed.
    Billy, make sure to explore ways to write some of that income off through business expenses. Home office expenses, auto expenses from commuting, supplies, etc. All of those types of things are self employment expenses.

  9. #9
    carpe damn diem billy007's Avatar
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    but even though she's not really self employed? Even if she was, not sure what she could really claim - 99% of her work is done on site. Her travel (including to and from MCO) and meal expenses get reimbursed, her laptop is provided by her employer...

  10. #10
    Atomic Punk Dave's Dreidel's Avatar
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    Quote Originally Posted by billy007 View Post
    It's on a 1099-MISC. Even at 15.3% (which is what 12.4% and 2.9% add up to), that's only 900 bucks - not close to $1700.
    There is also the normal income tax at whatever your marginal rate is as well.

    Any expenses that you incurred that were not reimbursed in regards to earning the money is deductible on Schedule C.

    Also, don't forget that half of the self employment tax is deductible as an above the line deduction on Line 27 of Form 1040.
    Taylor Swift is nice to look at. Adele can sing.

    Emperor Brett - "I can't believe you guys are analyzing song-by-song Van Halen III? What next, analyzing the script of Stroker Ace looking for some shred of Citizen Kane?"

    David Lee Roth did the impossible. He made Van Halen better. Deal with it!

    Preferred pronouns: he/him/his

    Hurricane Halen - Let's all gingery touch our sword tips!!!

    DONATE TO THE LINKS YA CHEAP BASTARDS!!!!

  11. #11
    Atomic Punk Dave's Dreidel's Avatar
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    Quote Originally Posted by billy007 View Post
    but even though she's not really self employed? Even if she was, not sure what she could really claim - 99% of her work is done on site. Her travel (including to and from MCO) and meal expenses get reimbursed, her laptop is provided by her employer...
    Any type of contract work such as you descirbe is considered self employment income for income tax purposes.
    Taylor Swift is nice to look at. Adele can sing.

    Emperor Brett - "I can't believe you guys are analyzing song-by-song Van Halen III? What next, analyzing the script of Stroker Ace looking for some shred of Citizen Kane?"

    David Lee Roth did the impossible. He made Van Halen better. Deal with it!

    Preferred pronouns: he/him/his

    Hurricane Halen - Let's all gingery touch our sword tips!!!

    DONATE TO THE LINKS YA CHEAP BASTARDS!!!!

 

 

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