So I put my taxes off until today because I had comps, and other things hanging over my head. Instead of taking the boat out and enjoying time with my husband I sat in my office and messed with my taxes from 9 AM this sunny morning until now. Here is some words of wisdom for the online adjunct and taxes.
- Let's say you work for 5 places, and you make 12,000 dollars per year at each school. Each of those schools will tax you like you make 12,000 dollars. Then come tax time...you owe in the 60,000 dollar bracket. Sound fun? There is more
- Some schools can't get their pay roll right. So every year I have to try and straighten that out. This year...I had to file a Kansas state tax return, Mississippi, Pennsylvania, and Connecticut. Fun stuff considering how hard it is to figure out how much I owe each state. Fun fun! I thought I had straightened that out last year, but the problem cropped up again on a few of my W2s. Also one of the schools took out that I still live in Texas which has no state income tax. What a mess! But I am going to file because I want my 453 bucks back Kansas! That is right...I want it back, and I want it now!
- Some schools pay you as a contractor rather than an employee. This means I have 1099-Misc income rather than W2 income. The benefit of this is that I can fill out a schedule C and take some deductions for my home office. The downside is that I owe taxes...every year I owe taxes.
- Because I am a student I get to take 4,000 education life time learning deduction which is awesome! It helps a lot. I find that to be one thing that people don't always realize they can take. I think I will stay in school for the rest of my life as I love this one.
- I am signed up for as many 401k's as I am allowed out my various institutions. However I inadvertently over contribute every year. This leads to expensive and annoying withdrawals that I have to do and then pay taxes on.
- Prior to maxing these out I used to contribute to a self employed 401k which really helped tax wise! I highly recommend starting one of these. You will need a Federal tax ID number, but you can set up a corporation at legalzoom.com for $295. It helps tax wise! :)
- Set up a corporation. If you are operating as a sole proprietor, you will be required to pay self-employment tax on your profit, currently at 15.3%. If you set up a corporation for your business, only the salary you pay yourself is subject to self-employment tax. Depending on your situation, you may be able to save as much as 50% on your tax bill. Another tax benefit of forming a corporation is that select medical and childcare costs may be deductible, which cannot be deducted as a sole proprietor. I think I saved 2,000 dollars by setting up a corporation...
- I don't qualify for a lot of the deductions because my income is too high. However my husband and I file married filing jointly and that helps. He pays the right amount of taxes for what he makes...so I am the only problem child.
- I max out my IRA contributions. This helps save loads on my taxes. Plus I look at it like this. Say I have to pay 10,000 and if I contribute to my IRA I have pay 4,000 and then pay taxes of 8,000. I know that is 12,000 that I have to lay out, but I only don't get to keep 8,000. If I pay out the 10,000 with no retirement contribution I am out the whole 10,000. So I can be smug that eventually I will get that 4,000 plus interest back.
- I still have to pay each and every year. Each and every year...:) I get the penalties too..and I guess I should pay quarterly, but I don't. I would rather only be annoyed about this once a year.
- I just want to give anyone that teaches online the head's up to save money. Save up because come tax time you have to have enough money to write that check. I was dreading this year's taxes. I didn't even want to think about them. I am glad I have finally gotten them out of the way. I efiled earlier, and I am going to let the IRS draft my money write out of my quivering bank account. My mom said she doesn't like the IRS to have that much power. But whatever...
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3 Mad Ramblings:
THANK YOU so much for this. I used to wonder if I was the only going through all this crap when doing taxes. Working for so many different schools in so many different states is the pitts when it comes to tax time. We ALWAYS have to pay A LOT. This year we were going to set up quarterly returns but who can figure that out? We need a much simpler tax system in this country. Thanks again!!
You know it is funny you said that. I got hit with the penalties for not paying during the year. Taxcut recommended that we pay XYZ quarterly. But then I got to thinking....that is how much we owe THIS YEAR. Next year...it will be different it always changes. Ugh!
So that plan won't work.
I am all for a fair tax! That would get my vote. :)
Wow--it makes think about what I have to look forward to (when I finally get that adjunct gig)! ;-) Nevertheless, I still can't wait.
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