How Filing Taxes With Two Jobs Affects Your Return
Getting a second job can be exciting. It might allow you to buy that fancy car you’ve been eyeing or attain a financial milestone you always dreamed of. Rarely do people think about how much the IRS will now expect them to pay, though.
You may have to increase your tax withholding, or the added income may put you in a higher tax bracket, depending on the type of job you have. Here are a few possible situations:
Filing taxes with two jobs is much easier when you have a traditional job that pays an hourly wage or a monthly stipend. This means you will also get a W-2 from your second job, and the IRS will require you to file a W-9 form that spells out how much taxes your employer will withhold.
Some people choose to claim zero on the W-9 form of their second employer. This might seem like an easier option, but many of these people end up owing more than they paid the IRS. It’s imperative in such a case to make any necessary adjustments when filing your income taxes. You can also choose to use a withholding calculator to find an estimate of the taxes the IRS will expect you to pay.
Things can get more challenging when filing taxes with two jobs if you’re a freelancer or an independent contractor. That’s because no one withholds your earnings, and you’ll be responsible for paying all your taxes.
The IRS expects you to make quarterly payments if you are an independent contractor and estimate your taxes. That might seem like too much of a task, but skipping those quarterly payments can lead the IRS to penalize you for underpayment of taxes.
Working two jobs is a great way to earn extra money, but if you’re not careful with your taxes, they can become an expensive and time-consuming chore. The last thing you want is to get tangled up with the IRS or pay more than you had to. You may want to consult with tax professionals to ensure you’re maximizing your outcome.