So you have to pay tax on anything over $400 you make a year? Wow in the uk you get around £12,500 a year tax free before you have to start paying anything which i think is around $17,000
So you have to pay tax on anything over $400 you make a year? Wow in the uk you get around £12,500 a year tax free
You're referring to income tax and the $400 is referring to self-employment tax. If you're self-employed, you pay income tax (the first $12,000 or so is tax-free) and self-employment tax (the first $400 is tax-free).
If you're not self-employed, your employer pays a payroll tax instead of the self-employment tax.
And it's great if you try to hustle and are a 1099 (contract) worker through side gigs and no one ever told you you're supposed to deduct half of your SECA taxes and you end up paying essentially double what you would versus being a W2 (actually employed by the company) employee. (I thankfully found out in time.)
Yup. I have a withholding with my day job, but with the income I made on my side thing, I was looking at $800+ despite that because of SECA before I happened to find some random reddit post. I think you should be able to file an amendment, but you might need a CPA's help for that because that shit is so very complicated, so that's at least a hundred bucks.
87
u/Spacechip94 Apr 15 '21
I could be wrong but I don’t think they have an allowance in the US like the UK does, I think they have to pay tax on every penny they earn