I am considering working a second job to increase my income somewhat before Christmas. At my main job I earn $50k a year pre-taxes. How much can I earn with a side job before my tax bracket jumps? If I were to work an extra 10 hours a week in a side job that pays approximately $10 an hour, will this result in increased income, or would it be a waste of time due to increased taxes?
Make as much as you want. You can not possibly lose money by making more money. Just make sure to claim Single 0 on your W4 for the part-time job.
$50,000/year puts you in bracket 3 $32,250 - $78,850 where you owe $4,481.25 + 25% at $10/hr, 10 hrs/week you are looking at an extra $5,200 bringing you total income up to $55,200. WELL below the next tax braket of $78,850.
Mr. Jobs' investment income was actually taxed TWICE, so about 45-50%. It was first taxed at the highest rate on the earned income (33-35%), then taxed again when his earned income made him dividend income through investment. Sounds pretty unfair to me.
It is never a waste of time to earn more income. I think you are misunderstanding something about tax brackets. Yes, we are all in a bracket of taxes based on our total income for the year. But not all of our income is in that tax bracket. The first money for all of us is taxed at 0% - up to the amount of our standard or itemized deductions plus all of our personal and dependent exemptions. Then the next bunch is taxed at 10% and then the next bunch at 15% and then the next bunch at 25% and so on. If you make it to the 25% bracket for example, that does NOT mean the they suddenly tax ALL of your income at 25%. It just means the last of your money will be taxed at 25%. So if you are thinking of adding another source of income like a job, and it does push you from the 15% to the 25% bracket for example, that only affects the new money from the new income source. All of the money from your primary income will still be taxed partly at 0, partly at 10%, and partly at 15%. So the worst you could do in this example (being in the 15% bracket but near the 25% bracket with your primary income) is to have some of the additional income taxed at 15% (until you reach the beginning of the 25% bracket) and the rest taxed at 25%.
Your bracket does not jump. You only pay the higher rate on the amount of income over the bracket limit. See the tax tables at ww.irs . You pay 0% on part of your income, 10%, then 15%, 25%. You do not suddenly pay 25% on your whole income. What you do have to watch is to make sure your federal withholding will cover your second job, if the first employer does not know about the second and vice versa, you might be short since part of your income may be taxed at a higher rate, but your employer is wthholding based on the lower salary of a single job.
