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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 12235
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 2 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