When you're part time wholesaling while working a day job how do you handle your taxes? Do you set aside 35% from wholesaling then pay quarterly? Then do you change the way you file taxes on your day job?
In my opinion, the easiest way to do it is to calculate your approximate tax bracket for 2015 (the new tables are here), and then set aside the appropriate percentage of your wholesaling profits. For example, if you make $100,000 a year at your job and $20,000 wholesaling, your income for the year would be $120,000, which puts you in the 28% tax bracket. So if you make $5,000 profit on a wholesale deal, set aside $1400 for taxes.
Keep in mind, this is just a rough formula. There are deductions for expenses, and the self-employment. If you choose to file as an LLC, it gets a little more complicated, and you would need a qualified accountant (I'm just a bookkeeper). It is definitely advisable to pay quarterly.
Thanks for the link, and great advice about how to handle the wholesale profits! I had that question myself......
lets say you make 10k self employment money. you will have to pay self employment tax of 15%, and also pay federal tax and any applicable state income tax.
personally, I save 30-35% of my se money to pay state and federal taxes.
@Mike Gallagher Good rule of thumb. I will point out that Social Security taxes are capped in 2015 when you hit $118,500 in earnings. So if you earn $100K in the JOB and $38.5K wholesaling, you only pay the 12.4% social security tax on $18.5K. The last $20K in self-employed earnings don't receive that tax. All $38.5K does get taxed at 2.9% for Medicare.
if there are any CPA out there please chime in on this one
@Sam Williams good luck
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