pipspeak wrote:
if you work at home and are self employed it's very often the case that a "real" job will have to pay significantly more to be worthwhile. After deductions and write-offs, my effective tax rate each year is in the single digits. To make the same net income a salaried job would have to pay me about 50% more than I earn now (gross).
This may in fact be the case for you, but I don't buy that this is the rate for most people.
If your effective tax rate is in the single digits you are:
A) not making much net, taxable profit so your effective tax rate is so low because you're constantly sinking the bulk of your revenue into expenses. (Lots of work, little $$)
B) not making much revenue, so your standard deduction cuts down your tax rate.
C) bringing in so little revenue against costs that you don't pay much if anything to FICA.
or
D) cheating on your taxes by deducting things that you shouldn't, making personal expenses business expenses, not declaring income.
or
E) are using shell companies or exploiting a tax loophole.
It's almost always the case that being self-employed carries tax/expense penalties far above being an employee. I'm still trying to figure out how anyone would have to make 50% higher gross in order to take home as much as an employee as someone self-employed-- and be in fiscally comfortable situation.
mmurph-- I know. I always have to do a double-take when I hear the line about not getting paid more because it will result in less post-tax income... since that is virtually impossible.
In my situation, it wasn't just taxes. It was a number of other things including child care, health insurance, and income I would loose as a result of not being able to do as much freelance work.
oobie wrote:
In my situation, it wasn't just taxes. It was a number of other things including child care, health insurance, and income I would loose as a result of not being able to do as much freelance work.
Yeah, that makes sense.
But, if you're making less than $40K now, "lost income" and "taxes" don't belong on your list of reasons. Because if your gross income goes up, and you go from self-employed to employed... your take home automatically goes up.
It's "other things," like health insurance (because of some tricky/good setup you've got now), and child care, etc.
In any regard, it sounds like the money is NOT the deciding factor here. Whatever you're making seems like it's enough for you-- and the opportunity to have flexible hours, do freelance photography on the side, and decide your own path appear to matter the most.
And BTW, I'm in the self-employed, freelance category. I know the feeling. I'm happy making less cash to be doing what I am doing. It's actually a VERY low bar above which increasing income does not provide much if any return wrt happiness. Though being able to fly business class, as a professor once told me, is nice because someone will hang your coat up for you and you can stretch your legs out (of course, that professor resembled a pudgy Jewish version of Kim Jung-il, studied Fassbinder films for a career, and is the subject of the song Debaser by the Pixies...)
