Do I need to file for this source of income?

[glorb2]

I work two jobs: a day job and an internet job. My day job gives me a W2 so I obviously need to file that, but my internet job I have no clue how or if I need to file. I made about $3600 (albeit less because I get paid via paypal, and they deduct a portion as a service charge) off the job last year so I dont know if that needs to be filed or not - I know absolutely nothing when it comes to taxes. I've spoken briefly with an expert since I was planning on having one do my taxes for me this year, and he stated that I might owe in Federal, State AND local. Can anyone give me some insight into things and whether or not I'll have to file/pay? I live in Pennsylvania if you needed to know. Thank you.

 

[davew128]

What makes you think your expert was lying to you?

 

[FlyingRon]

You report your internet business most likely on Schedule C. You report your gross receipts from the contracting party and then deduct from that your expenses. It gets added in with your W-2 income.
Of course you owe income tax on that as well as self-employment tax. If you've not withheld enough to cover all your tax liabilities, you will owe more money. Unless you meet the safe harbor requirements you will also owe a small penalty and interest for failure to file estimated tax payments throughout the tax year.

 

[glorb2]

oooh boy, taxes so fun. Can't even work a ****ing job online without getting hit with some penalty I didn't know about.

Unless you meet the safe harbor requirements you will also owe a small penalty and interest for failure to file estimated tax payments throughout the tax year.

Any chance you can elaborate on that please?

Also, do you think you can give a ballpark estimate on how much I might owe? (assume that I have no expenses) Or is it just more complicated than that to be able to get a rough answer? (made about 3600 with the online job last year)

 

[FlyingRon]

oooh boy, taxes so fun. Can't even work a ****ing job online without getting hit with some penalty I didn't know about.



Any chance you can elaborate on that please?

Also, do you think you can give a ballpark estimate on how much I might owe? (assume that I have no expenses) Or is it just more complicated than that to be able to get a rough answer? (made about 3600 with the online job last year)

Safe harbor pretty much says that you can duck the penalty (not the tax) if you were close based on what you made last year. If this is your first year in the new business, you may avoid that.

Your tax is your tax. Figure out what you actually net'd after expenses and then look at the top tax tier you're in. Most likely you owe 25% of the amount you netted as federal income tax PLUS another 15.3% as self employment tax (SS/medicare) plus whatever the state tax rates are (you didn't say what state you're in).

 

[LdiJ]

oooh boy, taxes so fun. Can't even work a ****ing job online without getting hit with some penalty I didn't know about.



Any chance you can elaborate on that please?

Also, do you think you can give a ballpark estimate on how much I might owe? (assume that I have no expenses) Or is it just more complicated than that to be able to get a rough answer? (made about 3600 with the online job last year)

I am going to try to explain this in as simplistic terms as possible.

All of your income, from all sources, gets lumped together on your tax return. Then, deductions and exemptions get deducted from your income to determine your taxable income. Your tax is calculated. Then credits are applied, and then self employment tax is added.

Then your withholding is deducted from the balance. If your withholding is greater than your tax, you get a refund. If your withholding is less than your tax, you owe.

Its impossible for anyone to tell you how much you are going to owe without knowing all of the numbers. Its only possible, like flyingron did, to give you an approximation of how much tax that particular income might generate. You are going to have 15+% in self employment tax, and either 10%, 15% or 25% regular income tax based on your overall income level.