The Tax Man Cometh Four Times a Year?

Here I sit, on this beautiful Tuesday. Regretful for not putting out a post on Monday, but at the same time not.

Mr. Wanderlust had a four day pass so we settled some things around the house, bonded and enjoyed some us time. We played some Lego Jurassic Park video game, walked to the farmers market, chilled and went to the beach. We went to the beach for a whole 10 minutes! Aren’t you proud of us for getting out?!

It was a gross weekend. It rained all day on Saturday and most of Sunday. It was weird on Friday too. Monday was when we went to the beach. The rain brought cool temperatures (76 degrees Fahrenheit) and 10-15 mile per hour trade winds. We knew it wouldn’t be an ideal day at the beach but just wanted to go to read and chill. So, I packed our lunches and gathered up all the things. We drove to the beach, parked and wandered our way to a spot. It was perfect parasailing weather. As we laid our towels out the wind kicking spray in our face, seeming to kick up more and more…I realized it was raining. The clouds build up around the mountains meaning the rain sticks around.Neither one of us are particularly fond of laying out in the rain, so we headed to the grocery store instead!

Perks of living by the beach. You can go whenever! So, it isn’t like it was a weekend wasted.

Now, onto this blog post!!

I mentioned in my last post…

By mention I mean talked incessantly about my new job.

Part of my job leaves me as an independent contractor or a 1099 employee. Basically, this means that I am responsible for my own taxes. So, I have to do quarterly taxes and take out taxes on my gross income. So, how am I going to manage this?

Well, I do have a file for my side hustles. I will do another update on those in September when quarterly taxes are due (hey, look at that) and actually show you what the file looks like.

I am also going to be opening a high yield savings account (may as well get something off that money as it sits) to transfer over the tax amounts each pay period. I want it to be completely separate so it doesn’t intentionally or unintentionally get dissolved into the budget. We realized with this recent move that we just dissolved everything in savings into the ‘travel’ fund, once we learned how the reimbursement process actually worked. Partly, because we had to borrow from ourselves to pay for the hotel until reimbursements came through. You can’t exactly do that with money you owe Uncle Sam.

I calculated our tax rate, or whatever and it came out close enough to 30% for me to feel okay with staying there. Our state income tax isn’t up for 2016 tax year so I am just using their previous year which isn’t the best life choice. Our federal income tax rate is 15% and then another 15% is for Self Employment Tax which covered Social Security and Medicare. We have always had a tax return from our state so I am not too worried about not including their number in my percentage. I will monkey with them later and adjust when I can find the 2016 tax rates.

I’ve also been looking into deductions. For my first tax year I am using the .54 cents per mile deduction; since I have to use a personal vehicle for work. I am contemplating paying for Mile IQ since it tracks all that with an easy to use interface. I think I could even use the yearly fee as a tax write off. I also can do something with the Self Employment Tax but I’m not 100% kosher on that. It seems as if I can deducted 50% of it.

Really, I have a ton of reading to do. There is a lot that goes into being a self employed employee. I don’t blame the business owner for doing it this way, but oh gracious, learning curve.

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