Taking On a Part-Time Contract to Increase Monthly Income
Part-time contract jobs are a great way to earn extra income while working from home. Individuals can work at their own pace, avoid being micro-managed, and get a break from the gossip and stressful office theatrics found in some companies. However, those considering this sort of work should also keep in mind that different tax regulations apply to freelancers.
The benefits of a part-time contract
Taking on a part-time contract means being considered an independent contractor or self-employed person. A part-time contractor is a business owner and as such chooses which clients to work with. One of the most rewarding benefits of working as a freelancer is the ability to work flexible hours. Not only can part-time contractors work when they want and for however long they want to, but as freelancers, there is no limit on their earnings. Out of pocket expenses can even be applied as business deductions when filing taxes.
Self-employment tax regulations to consider
But what are the challenges ?
Although part-time contracting is a great way to make extra cash, self-employment also comes with a few challenges. Part-time contractors must pay higher taxes and do not have access to employer-sponsored retirement, health or disability benefits. Instead of W-2 forms, part-time contractors fill out a 1040 Schedule C or 1099. Being self-employed, clients pay out gross earnings without tax deductions. Therefore, it’s good practice to seek the legal advice of a tax preparer prior to freelancing to find out whether taxes should be filed quarterly or once a year in order to avoid getting penalized by the IRS.
Taking on a part-time contract allows people to take a break from working in an office and make money at home instead. It’s a great option to consider for anyone who wants to earn a little extra income or get out of the daily office grind.