If you didn’t already know by now, Chris Peach is the guy who started Money Peach from his kitchen table in March 2015. He started Money Peach alongside his “real” job, because isn’t that how most small businesses start off? They usually are created alongside a “real” job.
Believe it or not, Peach’s real job is on a firetruck at one of the busiest fire houses in the city he serves. If you weren’t already aware, Chris is a full-time firefighter and paramedic. He is also a full-time blogger and online entrepreneur for Money Peach!
He is a problem solver, no matter if your house is on fire, you’re having a heart attack, or you’re needing advice on what debt to pay off first. 🙂
Just like many of you, Peach wears more than one hat for work!
Working More than One Job?
If you are one of the many people like Chris and myself who supplement your income by having more than one job, this post is going to provide you with some key takeaways for making sure you are filing your taxes correctly.
Working more than one job is tough. No, actually it is RIDICULOUSLY HARD. It requires a ton of sacrifice and self-motivation to tell yourself to keep going, even when you are dead tired. The icing on the cake is when you’re drinking your 4th cup of coffee to keep yourself going and you scroll through your Facebook feed and see those around you are taking time off to relax. Not cool!
However, before you go out and earn a bunch of income from your multiple jobs, you should first realize there are some special tips you must follow for filing taxes with multiple jobs.
Here are 3 things you need to consider if you have multiple jobs. Even if you’ve already done your taxes for this year, these may come in handy come tax time next spring.
1. Multiple Tax Withhold Forms May Result in Too Few Withholdings
While you may not enjoy paying taxes and taking home a smaller paycheck, you do want to be sure they have been prepared correctly and withheld from your paychecks all year. This way you don’t owe a crazy amount of money come next April.
If you have multiple jobs, a separate withholding form must be filled out for each employer. But, neither of those forms takes into account what is withheld from the other employer. Once your taxes are calculated, you might find that you owe a substantial amount in income tax for the year as a result.
How Do You Avoid Owing Too Much and File an Accurate Return?
The answer is to simply change your withholding on a new W-4 Form with your employer.
**I recommend you have this nearby when reading this post
**Two important things to remember when looking at your W-4:
- Claim all the allowances you normally would on the W-4 form for the job that pays you the most.
- Claim Zero on all W-4s for other employers.
Why does this work?
Claiming more allowances results in less being withheld from your paycheck for that employer.
On the other hand, claiming zero would result in the maximum being withheld from your paycheck for that employer.
Therefore, since you are claiming zero for every employer except the place where you earn the most, you shouldn’t have a huge tax burden at the end of the year.
Money Peach Pro-Tip
I don’t want you to get a tax refund.
A tax refund is pretty dumb when you break it down. A lot of people will look at it as a forced savings plan, however what it really means is you’re lending your hard-earned money throughout the year to the government at 0% interest.
After you have sent them your money, you then patiently sit and wait while they pay you back sometime next Spring. No thanks government.
This is why I would much rather have the money I earned throughout the year land inside each paycheck, and then owe the government a little (not a lot) come April. At least then I know I was 100% efficient with my money.
2. Two Earners/Multiple Jobs Worksheet
The second page of the IRS Form W-4 contains a Two-Earners/Multiple Jobs Worksheet.
You may need to fill out this portion of the form if you have multiple jobs or are married and both you and your spouse work.
The intent here is to ensure enough taxes are withheld from your paycheck to prevent you from owing a large payment to the IRS once your taxes are calculated. There is an income chart at the bottom of the worksheet to help you fill out the form.
Since you can’t claim less than zero, an additional dollar amount can be withheld from each paycheck of the employer of your choice.
The goal is to be as close as possible to the amount actually withheld and the amount you actually owe in taxes at the end of the year. This will result in having to write a much smaller check to the IRS when you to file your next tax return.
3. Social Security Tax
If you have multiple jobs, you need to be cautious in order to avoid an overpayment on your social security tax.
According to the Internal Revenue Service, for tax year 2017, the social security tax income limit is $127,200. If you hit that mark with your total combined income, you won’t need to pay any more social security tax for the year.
If you have gone over the limit and the amount withheld was over $7,886.40 for employees ($15,772.80 for self-employed since you don’t have an employer to pick up the first $7,886.40), which is the maximum amount to be withheld for 2017, an adjustment must be made. This is done on line 71 of your 1040 form. Talk to your tax professional if you have any concerns about this.
TurboTax will search over 350+ tax deductions and credits, maximizing your mortgage and property tax deductions, and turn your charitable donations into the deductions you have earned.
The Bottom Line
With over 70,000 pages in the tax code, it is going to be impossible to get your taxes “just right”. Right when you think you have it all figured out, they add one more page to the tax code and boom, your taxes are no longer perfect!
Just remember this: The best you can do is simply the best you can do when it comes to paying Uncle Sam.
Therefore, if you’re one of those hard-working rockstars who dives in and takes on multiple jobs with multiple employers, then bookmark this article so you have the valuable information you’ll need to help you with your next tax return.
What Do You Think?
Can you think of other tips for those filing taxes with multiple jobs? If so, leave me a comment below and share this info with the people you like, love, can’t stand, or are somewhere in between via the buttons below.