I Wish I’d Known That In Advance

by Mrs. Chicken on April 9, 2008

Did you know that the Federal self-employment tax rate is 15 percent of your income?

Neither did I, she said, looking glum.

{ 18 comments… read them below or add one }

Jonathan April 9, 2008 at 4:56 am: Living on the other side of the planet (as I do), no, I had no idea.

You could always rob banks of course – I believe that is tax free – well… unless you get caught of course.
Amanda April 9, 2008 at 5:10 am: Mmm, in my naive, bad at math way, I just set aside half of whatever I earn and then grin like the village idiot when my accountant says, “Amanda, you saved way too much.”
catnip April 9, 2008 at 5:41 am: Yes, and I’m terrified, hence I still haven’t done my taxes.
LD April 9, 2008 at 7:26 am: ouch
Kirsten April 9, 2008 at 7:30 am: That’s… dude, your government is robbing you blind… O_o
Katherine April 9, 2008 at 7:36 am: Taxes suck. Like democracy it’s a stupid system but the best one I can think of.
rachel April 9, 2008 at 8:14 am: Yuck.
I’m with Katherine: Taxes suck.
They took 33% of my husband’s bonus in taxes. That was a HUGE chunk. Beastards.
Leeanthro April 9, 2008 at 9:05 am: My only comment is that our taxpayer dollars are funding a baseless war, yet not every American child has food, a roof over their head, or medical insurance.

I wouldn’t be mad about the 15%, I’d be mad about what it’s spent on.

And isn’t 15% less than or equal to what most employed people pay? Difference is it comes out of our checks before it’s written so we don’t have to think about it as much. My take home is 70% of my gross (but that does include health insurance, etc.).
sugarplumsmom April 9, 2008 at 10:52 am: I actually did know that… it’s because when you are self employed, you have to pay BOTH the employee AND employer share of Social Security and Medicare taxes.
Mrs. Chicken April 9, 2008 at 10:57 am: Taxes are a glorious burden – they provide (in some cases) help for those who cannot help themselves: Medicaid, Medicare, Social Security, Food Stamps, etc. But I sure wish I’d known that we would be hit with a tax bill this year.

From now on I am taking 15 percent and stashing it away, so we aren’t surprised anymore.
Jennifer (Faking It) April 9, 2008 at 11:21 am: Yes, I did, she says, as a self-employed worker bee, who also learned the hard way.

FWIW, I now stash away 25% and then give myself a refund. Hee.
justmylife April 9, 2008 at 11:45 am: And they call it legal! If I robbed someone of their hard earned money, they would put me in jail. But you can’t bet the government. Still OUCH!
flutter April 9, 2008 at 12:54 pm: ohai! Did you know that flutter is in negotiations with a certain agency about that VERY THING?
lbotp April 9, 2008 at 1:33 pm: Perhaps you should go the estimated taxes route. Hence why I am now employed and not doing the fulltime freelance gig any more
Shania April 9, 2008 at 1:52 pm: Yes, unfortunately, I do have intimate knowledge of that fact.
Cat April 9, 2008 at 2:04 pm: DH worked from home for 6 months last year. We got hosed for 8K in federal taxes this time around!

I nagged him til he got a salary job starting January 1.
Stimey April 10, 2008 at 5:42 pm: Yep. I get screwed by that too. It sucks.
Fizz April 11, 2008 at 11:35 am: Wooo-boy. I did not know that, but I’m glad to hear it from you, since I’ve started my two little businesses this year. I don’t necessarily think I’ll earn enough to have to pay taxes on it, but if I do, at least I’ll know.

Still, sorry for the magnitude of this particular suckitude.