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Thread: What percent of my earnings should I save for taxes?

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    Member tacohut's Avatar
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    Dizzy What percent of my earnings should I save for taxes?

    I just started stripping, so by January I will still be in the lowest tax bracket. I thought that meant paying 15% in taxes, but now I'm not so sure. I've looked through the forums here and just got even more confused because of the tax vocabulary, so I was hoping someone might be able to tell me what percent they suggest for me to put back, or how to know.

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    Banned Aniela's Avatar
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    Default Re: What percent of my earnings should I save for taxes?

    The average that I have had taken out of vanilla paychecks is 30-33%. This typically covered Social Security, state income tax & any health benefits provided by the company. As independent contractors we also have a lovely lil self-employed tax to add into the budget. When filing as a dancer I have paid approx. 35-40%. Looking at this it seems high, but that's what the accountant came up w/ the last couple yrs & it actually was a ballpark match to what I figured. I also made daily(nightly?) recordings of my earnings & recorded everything, unless I brought home less than abt $75 -- on those nites, I said Fk the IRS & that amt basically went straight into savings/piss-away $$.

    This has just been my experience tho, & I have a terrible head for numbers & tax stuff. I wouldn't even know where to begin cheating on my taxes, if I were so inclined, & I'm too :paranoid: to even try.

    Definitely save Every. Single. Receipt. For Every. Single. Thing you purchase for work. Those will add up quick! Idk if smaller incidentals like makeup & extensions are still deductible, an accountant or one of the taxes-smarter ppl on here can tell you more abt that, but outfits, shoes, gas if you commute? Save all of it. Even if the receipt is just a hand-written note from your costume lady, bc she needs to be keeping those notes as well for her own records -- I had a couple of those that I didn't save bc I thought they don't look official so they won't be counted, but my accountant said he could have found a way to include them.

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    God/dess shanna dior's Avatar
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    Default Re: What percent of my earnings should I save for taxes?

    Put aside a third (33%). It's possibly you may end up owing less, especially with deductions (+1 on Aniela's advice to save all receipts), but it's better to have set aside too much than to have to scramble come payment time. Putting aside a third now is also good practice since even if you'll be in a low bracket this year, if you keep dancing next year, it's unlikely you'll stay in it. If you're used to only counting a third of your earnings as yours to spend, it won't be as difficult of a transition to start.

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    Default Re: What percent of my earnings should I save for taxes?

    ^^^ based on your limited earnings during 2014, you'll likely owe 15.3% social security tax, plus 1% ACA penalty tax, plus a few percent federal and state income tax ... thus maybe 20%. Once January arrives, you'll likely owe 15.3% social security tax, plus 2% ACA penalty tax, plus 10%+ in federal and state income taxes ... thus maybe 30%. There will be a lot of variables affecting the effective income tax percentage, from total amount of earnings, to the tax rate added by your particular state, to eligibility for particular tax credits, to single filing status vs married / head of household, to dependents etc. But 30% is fairly typical as long as you aren't earning 6 figures and as long as you don't live in a high tax rate state.

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    Default Re: What percent of my earnings should I save for taxes?

    I set aside between 20-25%, but I have a lot of write-offs.

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