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Thread: Another tax ? - married with dependents

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    Default Another tax ? - married with dependents

    I know tax questions get asked a lot, but I can't find an answer to this one. If it's been answered and someone can direct me to a thread, then awesome! But in case, I'll ask again.

    I keep seeing 30% as the amount I'll have to pay in taxes. I get that and I can figure that out. BUT I'm married and have children. My husband has a steady, salaried job with benefits, plus self-employment income/expenses. We have 3 children we claim as dependents (mine plus our two - his lives with her mom). So, dependents will reduce the total taxes I'd owe? Or...? We have usually ended up getting a tax refund at tax time with just his income - I'm wondering if my dancing income will just reduce or eliminate the refund and I won't have to pay?

    It's so confusing to me. When I was younger and danced I honestly probably didn't file as accurately as I should have, but I want everything to be by the book now, and I'm kind of lost. We have a good accountant who does our taxes who I'm sure will figure this out for us by April 15, but I'm trying to keep on top of things now. I've gathered I don't have to do quarterlies this year, and since I just started dancing again a few weeks ago, I would only really need it for the last quarter anyway.

    Any help is greatly appreciated. TIA!

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    God/dess Selina M's Avatar
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    Default Re: Another tax ? - married with dependents

    If you have 3 kids, you can take the personal exemption of $4000 for each person in the family, so $20,000. That reduces the amount of income subject to income tax. To simplify things, let's assume your husband's job is pulling enough tax out (since he gets a refund every year), and apply this to your part of the income. If you're only dancing for 3 months part time, there is no way you will hit the $20,000... bam, no income tax.

    Husband's refund can be applied to what you owe for SE tax.
    If you pull up the 1040, you can see how it works. The section that says Payments includes "tax withheld from a W-2" (your husband's job), "estimated quarterly payments made", and the earned income credit (not sure if you get that, varies by situation). Those count towards your total tax bill, which would include your SE taxes... if you only dance a couple nights a week for Oct-Dec, your SE tax will probably be <$1000.
    "People jack off with the left hand and point with the right."

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    Default Re: Another tax ? - married with dependents

    Thanks. That makes more sense. I seriously doubt I will earn that in the last three months of this year, and then I'll have a sense of what I will earn quarterly to figure out taxes for next year. We have a great accountant who I'm sure will figure it all out but he's getting old and keeps talking about retiring. I dread having to find someone new. LOL

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    Default Re: Another tax ? - married with dependents

    Well, I hate to be a Debbie Downer, but it might be a little more complicated than that.

    For starters, anything you make dancing is already in a higher tax bracket since it gets added on top of what he is making. Also, he may factoring the 3 dependents into his withholdings already. So there is no guarantee that what you normally get for a refund will be enough to offset SE and federal income taxes that may apply to what you make.

    If I were you, I would talk to the accountant now to schedule out how much you might owe if you hit certain earnings levels over the quarter, which he can determine using your husband's current income (salary + estimated outside income) and withholdings from his salaried job. There may be ways to manage it by having your husband's employer withhold extra upfront, but that is something that your accountant can help you figure out.

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    Default Re: Another tax ? - married with dependents

    That's a good suggestion. I think after I've been dancing here for awhile and can have a better sense of what my average earnings are going to be I will have my husband talk to our accountant and figure it out. I think we'll be fine for the rest of this year - we normally get a substantial refund which should cover what I would owe - but it will help me start planning for next year if I keep this up.

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    God/dess Zofia's Avatar
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    Default Re: Another tax ? - married with dependents

    Best practice, run the numbers.

    In your case, look at your take home income from the club, add that to your husband's income, take your deductions, figure your tax and credits. Compare that with you tax return from last year. See if dancing makes sense and how much you'll have to set aside for taxes.

    Here are a couple of calculators that will help:
    http://www.hrblock.com/get-answers/t...en/te/aboutYou
    https://turbotax.intuit.com/tax-tool...ors/taxcaster/
    https://www.taxact.com/tools/tax-calculator.asp

    I don't use H&R Block for anything, but their online calculator isn't too bad.

    HTH
    Z

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    Default Re: Another tax ? - married with dependents

    From personal experience, 3 months of earnings shouldn't change your taxes too much unless you are making stupid money. When I got married and started filing together, our return became a little less than half of what it was. My husband's witholdings, plus a bit extra, is enough to cover my portion of taxes. As I said, we still get a return, it is just significantly less. I don't know your numbers, so it may not work for you the same way. Best you can do is talk to a professional and hope for the best. Worst case scenario, you make to much and owe. But if that happens, you are making awesome money.

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