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How Does WorkMade Determine My Tax Payments?
How Does WorkMade Determine My Tax Payments?

Understanding Your Tax Obligations

Updated over a week ago

Forget Your Taxes with WorkMade

WorkMade simplifies tax management by considering your state of residence, filing status, income, and expenses to determine your tax payments to the IRS.

Understanding Your Effective Tax Rate

Your effective tax rate is a crucial part of our tax calculation. It's the average rate at which your income is taxed, allowing for accurate tax planning and budgeting.

  • We calculate your tax basis using the formula:

    • Salaried Income + Freelance Income - Business Expenses

As this number increases, you may move into higher tax brackets. We simplify this into your effective tax rate, which helps us accurately determine how much you owe.

πŸ’‘ Keep in mind your effective rate includes Federal Income Tax, State Income Tax (if applicable), Social Security and Medicare taxes.

For New WorkMade Users

We start by getting you caught up. To find your effective tax rate, we need:

  1. Salaried Income πŸ€‘

    1. Any income from salaried jobs you or your spouse have.

  2. Freelance Income 🀸

    1. Total freelance income earned so far.

  3. Freelance Expenses 🎁

    1. Total freelance expenses incurred so far.

We use your effective tax rate to determine your owed taxes, making sure you're caught up from Day 1 for a fresh start with WorkMade.

For Existing WorkMade Users

  1. Can't Pay On Day 1? No Problem! πŸ€”

    1. We'll track and remind you to catch up when you can.

  2. Setting Aside Income πŸ’Έ

    1. Moving forward, we'll set aside a portion of your income based on your effective tax rate.

      1. This ensures you're always prepared when tax payments are due.

  3. Identifying Expenses πŸ”

    1. As you spend money on your business, WorkMade identifies and classifies tax-deductible expenses to lower your overall tax bill.

In short, you manage your business as usual, and we handle your taxes!

Service Fee

WorkMade charges a 1% fee on your freelance income for comprehensive services, including:

  • Automated income detection

  • Bookkeeping

  • Expense categorization

  • Write-off detection

  • Tax preparation


WorkMade Fees Are Tax-Deductible!

  • WorkMade fees are automatically deducted on your taxes, reducing your tax obligation!

Note: Each tax situation is unique. WorkMade provides general info based on guidelines from tax authorities, which may change over time. For more details, refer to Regulation CC.

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