Consider The Tax Implications Before Increasing Your Workload
As a WAHM, how much you make often depends partly on how hard you work. Take on more clients and jobs, and your income will go up. If you have a busy home life and need to cut back on your work a bit, you have the flexibility to do so, though you'll likely see a dip in income.
If you find yourself in a tight financial position, you may naturally look to increase your work. However, before you seek extra clients and jobs, consider the tax implications.
Taxes Affect Your Additional Income
Let's say you currently make $36,900 per year. Your finances are tight, so you want to increase the amount of work that you do. Thanks to your efforts, you make $52,000 this year. You've increased your income by $15,100, right? Not quite so fast.
On income under $36,900 you will pay a 15% tax. (The first $9,075 of this is taxed at 10%.) Therefore, on your $36,900 income, you pay $5,081.25 in taxes. (You pay $907.50 on the first $9,075 and $4,173.75 on the additional $27,825).
When you earn $52,000, you will pay 25% for the additional $15,100 you earned beyond the $36,900 you used to earn. That means you'll pay an extra $3,775 in taxes thanks to your increased income for a total tax burden of $8.793.25.
On your extra $15,100 you make, you actually take home $11,325. You are still ahead, but you have to weigh whether the financial is enough to warrant the extra time you have to invest in your business to make extra money.
A Spouse's Income Can Make It Trickier
Keep in mind, the picture gets more complicated if you also have a spouse who is a wage earner and you file jointly. There are also dependent deductions and other credits and deductions to consider.
Still, before you take on extra work with the assumption that it will help you get ahead, take the time to crunch the numbers to make sure you are truly getting ahead at the rate you would like and not just working yourself needlessly.