She's not American (unless she moved there) but it can add up. You've got income tax, both for state taxes and federal taxes. State income taxes can vary from 0% in some states all the way up to 14.4% in California. Meanwhile federal tax rates are bracketed. So on your first $11,600, you're taxed at 10% but your income after $11,600 and up to $47,150 is taxed at 12%. This continues all the way up to $609,350, where all income after that is taxed at 37%. So someone making 120k may claim they're being taxed at 24% but the effective tax rate is several percent lower, they're just being charged 24% on every dollar bill they make after $100,525. This is why California and New York were screeching when the SALT (state and local tax) deduction was capped to $10,000 because people making like 200k+ and paying more than $10k in state taxes could only deduct that $10k.
Then there's the consideration of employment, as self-employment tax comes into play for covering social security and medicare taxes, which is 15.3% (12.4% for social security and 2.9% for medicare). However only the first 160k of your earnings is subject to the social security taxes though. Although if you exceed a threshold for your filing status, you may be liable for an additional 0.9% in medicare tax (which is like 200k if you're single). The IRS also splits up the self-employment taxes across 4 payment periods throughout the year, which can fuck with people more. There is a positive though where you can deduct your self-employment tax for determining your adjusted gross income, which is what your income tax is based on. Then you can automatically claim a standard deduction of $14,600 to your gross income to reduce your federal income tax. If this sounds all really gay and confusing, it's because it's intentionally set up this way because tax preparation companies lobby Congress to keep this shit confusing.
This is why the game of "are they an employee or are they a contractor" is important because that can mean a huge difference in how much they're taxed. I'm not familiar with UK tax laws but I wouldn't be surprised if they do have a similar system regarding self-employment taxes and that's why Mysta got wrecked, as he likely didn't realize being a contractor means he has to pay all that extra stuff that's usually handled by your employer.
Then there's the consideration of employment, as self-employment tax comes into play for covering social security and medicare taxes, which is 15.3% (12.4% for social security and 2.9% for medicare). However only the first 160k of your earnings is subject to the social security taxes though. Although if you exceed a threshold for your filing status, you may be liable for an additional 0.9% in medicare tax (which is like 200k if you're single). The IRS also splits up the self-employment taxes across 4 payment periods throughout the year, which can fuck with people more. There is a positive though where you can deduct your self-employment tax for determining your adjusted gross income, which is what your income tax is based on. Then you can automatically claim a standard deduction of $14,600 to your gross income to reduce your federal income tax. If this sounds all really gay and confusing, it's because it's intentionally set up this way because tax preparation companies lobby Congress to keep this shit confusing.
This is why the game of "are they an employee or are they a contractor" is important because that can mean a huge difference in how much they're taxed. I'm not familiar with UK tax laws but I wouldn't be surprised if they do have a similar system regarding self-employment taxes and that's why Mysta got wrecked, as he likely didn't realize being a contractor means he has to pay all that extra stuff that's usually handled by your employer.
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