
Originally Posted by
Melonie
^^^ in a scenario where there is camming income PLUS straight job income, some clarification is needed.
In a 'straight' paycheck only scenario with a $10,000 annual gross income, effective tax rate might be around 10% = $1,000 ... thanks to the low income tax bracket plus eligibility for 'low income' tax credits ( federal and state )
In a 'self-employed' only scenario with a $25,000 annual gross income, effective tax rate might be around 20% = $5,000 ... mostly due to the 15.3% 'self-employed' social security tax.
But in a combined scenario with $10,000 in 'straight' job income plus another $25,000 in 'self-employed' income, the combined effective tax rate is likely to rise to 25% ... because a higher income tax bracket applies to the combined $35,000 annual gross income, because eligibility for 'low income' tax credits will be lost or reduced, etc. 25% of the $10k worth of 'straight' job income = $2,500 ... meaning that employer tax withholding from 'straight' job paychecks will probably be $1,500 'short'. So besides owing $25k * 25% = $6,000 worth of taxes on the self-employed camming income, another $1,500 will need to be paid to cover the 'shortfall' in withholding on the 'straight' job paychecks.
Also, given that you live in NY, it's worth checking out other potential consequences of increasing your combined earnings to the point where your earnings exceed 200% ( = $23k ), 300% ( = $34k ), 400% ( = $46k ) etc. of the 'official poverty level'. Exceeding these income thresholds may disqualify you, or reduce the subsidies available, for SNAP, subsidized rent, subsidized utilities, discount public health exchange insurance premiums etc. Obviously, this may or may not apply in your particular situation.
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