Student loans, car payments, medical bills, adoption, mortgages, and savings are all reasons for earning extra income. But, have you ever wondered, how much is your money really worth? This map of “How Much Does Your State Collect in State and Local Income Taxes Per Capita?” from The Tax Foundation came across my feed recently. It gives you a comparison of the state and local income taxes per capita. As The Tax Foundation explains,
“This week’s map shows state and local combined individual income tax collections per person in the 2013 fiscal year (latest available data). This category includes broad-based taxes on wage and salary income, as well as taxes on specific types of income, such as interest and dividend. Forty-one states have broad-based income taxes, while two (New Hampshire and Tennessee) only tax interest and dividend income. Seven states have no individual income taxes (Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming).”
I remember bringing my first check home from my first job as a high school student. I worked at a daycare afterschool with elementary age children. I made minimum wage, and I have to say I was pretty disappointed when I opened my check to see how much money was taken out for taxes! It was a good lesson to learn at an early age, that your money isn’t really your money until after taxes. However, it was fun to get a little money back through my tax refund.
As a new entrepreneur/contractor for online work from home opportunities, I have to take my own taxes out of my payments received from employers. The standard amount to take out is 30% to cover your taxes as an independent contractor. It’s important to remember to put aside your the money to cover your taxes with each payment you receive. You don’t want to show up next tax season owing money that you have already spent.
I have a separate account that I use for saving my tax payment, so that it doesn’t become confusing to me when I look at my bank account.
How are you preparing for next tax season while earning extra income?