Planning Income Deductions Ahead of Time
Financial Management

Planning Income Deductions Ahead of Time

financial literacy

For a lot of people who are self-employed this often means that you have to prepare and deduct your own taxes by the end of the year. This is as opposed to people like your employer automatically deducting your pay where afterwards people often try and see if they can get a refund through some adjustments. With that said it’s still so surprising on how many people don’t consider paying taxes at the end of the year as their whole income factor.

For example, imagine someone starting a side home business selling products on Amazon. They make maybe two thousand a year where once they get the money they just spend it as if it was tax free income. However, at the end of the year they discover once they claim that two thousand dollars as part of their total income they end up having to pay a few hundred dollar in taxes. Now because they already spent all that money it’s like at the end of the year they still made less money overall by in a sense over spending.

Don’t forget that you need to account for how much you will lose in taxes. I guess when you start to make your own money people tend to forget that.

Leave a Reply

Your email address will not be published. Required fields are marked *