Do you pet sitters have the same fear of paying a lot in taxes - it would be nice if Rover could hold on to an extra 5% for every stay just to go back to taxes.
I've been an independent contractor for many years, and the issue of taxes is very important. If you make (or expect to make) a lot of money through Rover, it's a good idea to pay estimated taxes quarterly throughout the year. I always set aside 30% of whatever I make to cover that. Taxes on self employment income will always be higher than what is deducted from a normal job because you are also paying self-employment taxes and the Medicare/FICA stuff yourself.
There are deductions you can take as an independent contractor. Any supplies you buy, any fees you pay for advertising, any marketing materials you buy. Consult the IRS website for information on Schedule C, which is what you will file for your rover.com income.
If you have specific questions, it's always best to consult a tax professional, because each situation is different.
Are the Rover fees tax deductible since I am considered an independent contractor with them?
You should expect to pay self-employment taxes of 15.3% PLUS ordinary income taxes (whatever your marginal (top) tax bracket is, if you have other sources of income). For me, that's a nice, whopping, 48.8% (SE + Fed + local). You won't pay any tax on expenses, as mentioned (treats, toys, transportation, advertising...anything you ACTUALLY spent running the business). You also won't pay the full self-employment tax if your income otherwise is over $118,500 (you don't owe social security taxes on income above that number...I'm not sure how that works if you're married filing jointly). You may be eligible for other deductions or credits.
Because I already use an accountant, I just told him that I was doing this and he told me how much to set aside (as a % of earnings). If you don't use an accountant who you can easily consult, you probably want to set aside at least state/local and federal taxes at your top tax bracket and the 15.3% self-employment tax. If you do that, worst case scenario, you owe less and can give yourself a bonus!
That is terrifying. It's a good thing I buy so much dog crap.. I may not end up paying much with deductions, but that only means that I'm not really making anything from Rover.
I should caution that the deductions wouldn't be for ALL treats or toys or whatnot, just what you buy for your "business." If you regularly provide food/treats/toys for your clients, those are deductible. If you buy those only for your own dog, they are not (excepting certain circumstances like you intended a toy to be for your dog but it was destroyed by a client dog and you replaced it).
Pretty much everything I buy is dual purpose, though most of it I wouldn't buy for my own dogs if I didn't also have a use for it with my guests. For instance, one of my dogs wears a medium sized harness; she only needs one, but I have three of them because I also use them with my guests, and the medium size is the most versatile. Treats are given to guests and used in care packages to send home with them, though of course my dogs also eat them. My bike and the jogger attachments are used for my own dogs, but I also use it with my guests.
Good point to bring up taxes. I just started and am learning to keep track of mileage, promotional costs, and supplies.
I am fortunate that every year my husband works for Liberty Tax from January through April. He will be updated on the tax codes and his boss will help make sure that we have all the deductions allowed.
I despise doing taxes, and am so very happy he does it for us!
Yep! Totally worried. Last year I didn't hit the threshold to have to pay (I wasn't on Rover for the entire year, and I didn't cash out the bulk of my earnings until January, so it'll count for this year's taxes). I already have my other job withholding at the maximum rate, which is enough to get a little bit back from federal/state, but I have no idea what to expect from Rover.
What is the threshold?
Just wondering if the percentage that Rover takes counts as a deduction since they provide the advertisement.