52 Weeks: Earnings – A Second Job

Thinking of getting a second job, or maybe an at home parent is considering adding a second income to the family?

From the book:

The financial question is, how much of the second income will we be able to keep, after what it costs to earn it? Below is a worksheet that you can use to find out the effect of a second income on your own family. First, here’s an example. Suppose the best second job available right now pays minimum wage, currently $7.25 an hour. Gross pay for forty hours of work in a week would be $290.

Taxes for Social Security and Medicare will be withheld at the rate of 5.65%. In this case, that would be $16.39.

$290 minus $16.39 = $273.62.

Federal income tax may be withheld. If you are married filing jointly, the income from the second job will be taxed on top of the income from the first job. If the combination of the first income and the second income puts you in the 15% marginal income tax bracket, then the additional income will be taxed at 15%. “Marginal tax rate” means the percentage of each additional dollar earned that will go for taxes.

For 2013, if the income of a couple that files jointly is between $17,850 and $72,500, the tax rate is 15% . 15% of $290 is $43.50

$273.62 minus $43.50 = $230.12 after taxes.

The least expensive childcare in my area costs $80 per week per child or $100 per infant.

$230.12 minus $80 = $150.12 per week after care for one child

$150.12 minus $100 = $50.12 per week after care for a child and an infant.

Now it becomes blurrier. Much depends on whether you already run a second car, or you will buy one for the job, or you will take a bus, walk, bicycle. . . . Each family can calculate what increase in transportation cost the second job will cause. It may be as simple as the amount of gas burned for the commute or the cost of bus fare.

$50.12 minus $10 for transportation = $40.12

If the job requires special clothing that you don’t already have, that cost will have to be subtracted from earnings. You can divide the cost of the clothes by the number of weeks the clothes will probably last and subtract a week’s worth from this weekly calculation.

Will there be an added cost of buying lunches, or will you have the time and energy to make lunches at home ahead of time? If you’re both tired from working, will you spend money on take-out and prepared foods? Will you need to pay someone to do yard work and house cleaning?

Too many workplaces have costly events like showers and parties for co-workers. People will want you to buy over-priced things for their children’s fundraisers. This will come on top of existing social events and fundraisers in your family and neighborhood. It’s a whole new vista of possible costs. This will have to be taken into account too, unless you have the iron will to refuse to join in.

Second income worksheet

Here’s a worksheet you can use for your own situation

_______________gross hourly rate

x______________ hours per week

=______________ weekly pay (If salaried, write weekly salary on this line)

x 0.0565___________for Social Security and Medicare taxes

=______________new balance after subtracting SS and Medicare taxes

-______________federal tax: new balance times your marginal tax rate (below)

=______________balance after taxes

-______________weekly childcare costs if you have those costs

=______________balance after childcare

-______________ added costs of traveling to the job

=______________balance after transportation

-______________ costs of work clothing and care of work clothing

=______________balance after special clothing

-______________added cost of purchased lunches and work parties and gifts

=______________balance after added social costs

-______________minus additional cost of prepared foods and meals out

=______________equals balance after convenience

-_____________ minus cost of hiring things done, yard work and house cleaning

=_____________equals balance after hired workers

÷_____________hours worked per week

=_____________ the “real” hourly wage you get to keep after work expenses

 

Tax rates for married filing jointly for 2013:

Marginal Rate Income Range
10% $0 to $17,850
15% $17,850 to $72,500
25% 72,500 to $146,400
28% 146,400 to $223,050
33% $223,050 to $398,350

 

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