Working several jobs can increase tax charges: how to reduce taxes

Damien has secretly worked on several distant jobs, winning six digits since and deactivated for years. To reduce its heavy tax burden, it has used several strategies, especially at the maximum of its 401 (K).

Damien, who works in computer support, is on the right track to win $ 386,000 this year from three full -time distant jobs, two of which are 1,099 entrepreneurial stations. The benefits of his contractual positions take place towards an LLC which he established in 2022, which he elected to be taxed as a company. This helps him reduce the amount he owes in independent work taxes, he said.

“On the tax level, this is a substantial difference,” said Damien, whose identity was verified by Business Insider but who asked to use a pseudonym, citing the fear of professional repercussions. “I should guess that it is tens of thousands of dollars that I save.”

Damien is one of the Americans who have secretly juggled on several distant jobs to increase their income and who have found strategies to reduce their tax charges. Others make charity donations and deduct commercial expenses from their income. In the past two years, BI has interviewed more than two dozen “overeamed” workers who have used their additional income to travel the world, buy weight loss drugs and repay the debt.

Six job jugglers have shared their state experiences that pseudonyms would be used, for fear of professional repercussions. Bi has verified their identities and their income.

Admittedly, what works for these job jugglers may not make sense to everyone. Tax professionals can provide advice for specific situations.

S-CORPS and commercial deductions help jugglers to reduce their taxes

John, who works there, won more than $ 300,000 in 2023 secretly working two distant jobs. His profits from a contract employment move in his S-CORP, which he also uses to deduct commercial spending, reducing his taxable income.

Trade spending includes software subscriptions to Chatgpt, online programming courses and the deduction of the home office, which allows it to deduct $ 5 per square foot from your home office.

“If I needed a new computer desk or a new chair, I would direct this through my business,” said John, who is based in California.

To further reduce his taxable income, John said he donated charitable organizations and makes important 401 (K) contributions.

Harrison also has a S-CORP, but his tax situation is more complicated. Harrison has six full -time distance jobs as a quality insurance professional in the IT sector and estimates that he will earn around $ 800,000 this year. He was a team of seven workers who help him perform his duties.

Three of Harrison’s jobs are contractual roles, and he said that the income of these flows in his S-CORP, which, according to him, has helped reduce his taxable income.

Lisa Greene-Lewis, a CPA and Turbotax tax expert, said S-Corps can help people legally reduce the amount they owe in independent work taxes. Individuals are required to pay a “reasonable” salary – which is subject to employment taxes – but can then make additional distributions of the profits generated by their companies which are not subject to these taxes. But she said there were limits to the tax advantages of a S-CORP.

“In the eyes of the IRS, you cannot afford the majority of your business income to avoid more tax on independent work,” she said, adding: “If you pay too much, IRS could determine the amount they think is paid according to your commercial profit.”

She added that S-CORP owners tend to have more expenses related to tax preparation and must produce a commercial tax return by March 1, rather than the deadline for April 15 for personal income declarations.

Despite the tax advantages that come with his S-CORP, Harrison said he tended to have a significant amount of money in terms of taxes. But he said he was still walking financially.

“Doing more and paying more taxes is better than doing less and paying less,” he said.

Some job jugglers accept their higher taxes

Adam earns around $ 170,000 a year, secretly working on two remote security risk jobs. He plans to reduce his taxable income this year by contributing $ 23,500 to his 401 (K) – the maximum amount authorized by the IRS – and giving about $ 1,200 to charitable organizations.

However, not all work jugglers take on significant measures to reduce their taxable income. Daniel wins around $ 250,000 per year by working two remote computer concerts in the finance industry. He said his main objective was to have enough taxes to ensure that his tax payment was not too high.

“I have never had a problem with tax payment,” he said.

Kelly is on the right track to gain nearly $ 300,000 this year secretly working two full -time distance jobs as an engineer. She said that her taxes are not too complicated and that the search for means of lowering her taxable income is not something that she thinks too much.

“I don’t mind paying taxes on both jobs even if I owe it,” she said.

Do you have a story to share on the secretly work of several jobs or discover it that an employee does it? Contact this journalist by email to jzinkula@businessinsider.com or signal to Jzinkula. 29.