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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 11592
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I live in New Mexico and have been unemployed all year. A family

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I live in New Mexico and have been unemployed all year. A family wants to hire me to do 12 to 18 hours/week of childcare in their home. They have paperwork for me to complete regarding taxes. How much would I charge them per hour to make my net income (AFTER taxes) come out to $15 per hour? I am afraid of coming out with insufficient income if I cannot figure this out before we begin.

Lane :

Hi,

Lane :

Your taxes will depend on how you file (married filing, jointly - Single) let me know that AND them I can figure it both ways, but I'

Lane :

ll need to know whether they are going to have you be a contractor (which will mean that you pay ALL of the social security and medicare ot as an emplopyee, which will mean that they pay half and you pay half)

Lane :

So, first and most import ... MARRIED or SINGLE?

Customer:

Married and filing jointly, I expect. (The only reason we would file separately is if we discover at tax time that it would save us money.) Spouse earns around $70K and I have had zero income this calendar year.

Customer:

The employer wants to pay half of my SS and Medicare costs.

Lane :

OK, let me do a projection really quickly (By the way Married FIling Jointly is better... loer tax brackets and higher standard deductions

Lane :

one last question ... any dependents?

Lane :

Never mind... doesn't really matter With him being a 70K you are squarely in the 25% bracket

Lane :

so to ballpark it add 25% (you're money will be adding to what i s already there

Lane :

SO, around 18.75/hr

Customer:

Thanks!

Lane :

Sorry let me bak up (I had already pulled the single tables)

Lane :

Wait...

Lane :

Here's married filing jointly

Lane :

  • 10% on taxable income from $0 to $17,850, plus

  • 15% on taxable income over $17,850 to $72,500, plus

  • 25% on taxable income over $72,500 to $146,400, plus

  • 28% on taxable income over $146,400 to $223,050, plus

  • 33% on taxable income over $223,050 to $398,350, plus

  • 35% on taxable income over $398,350 to $450,000, plus

  • 39.6% on taxable income over $450,000.


Lane :

As you can see almost aoo will actually be at 15% (there's that married filing jointly advantage) SO it's actually only 17.25

Lane :

My apologies ... but again 15 x 1.15 = 17.25

Customer:

All right. I appreciate the data very much. Thanks again -- really!

Lane :

Remember that the brackets above show Taxable income and you will reduce your stabdard deductions and exemptions from that to be squarely in the 15% bracket

Lane :

You are very welcome

Lane :

If this HAS helped, I would appreciate a feedback rating of 3 (OK) or better … That's the only way they will pay us here.


HOWEVER, if you need more on this, PLEASE COME BACK here, so you won't be charged for another question.

Lane and other Tax Specialists are ready to help you

One last piece Jeanette,

 

When 1/2 of Social Security and Medicare are added it becomes $18.39.

 

15% + 7.65% = 22.65%

 

15 x 1.2265 = 18.39

 

 

That does it

 

Thanks

 

Lane