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Applying tax to hourly rates

Active Member
Lisa L Member Since: Oct 2, 2017
1 of 5

Hello,

 

I am a freelancer who illustrates books in the state of PA which requires me to charge 6% tax on my work.  I am able to apply this successfully to fixed jobs, but my question is what is the best way to include 6% for hourly projects?

Community Guru
Virginia F Member Since: Feb 15, 2016
2 of 5

Simply factor that in to your hourly rate ... plus the *cut Upwork takes, of course.

 

*Which can be reported as a business expense on your taxes.

Active Member
Lisa L Member Since: Oct 2, 2017
3 of 5
ok, my hourly rate currently is $15, so when I multiply 6% i get .90 which
I add to the $15 making it $15.90. I just want to confirm that is correct.
If not please clarify.
Thanks!
Community Guru
Miriam H Member Since: May 16, 2017
4 of 5

Lisa L wrote:
ok, my hourly rate currently is $15, so when I multiply 6% i get .90 which
I add to the $15 making it $15.90. I just want to confirm that is correct.
If not please clarify.
Thanks!

I recommend consulting with an accountant or a small business non-profit group to answer this type of question. I know for our photography business, when we charge sales tax it's calculated on top of the cost of goods and paid by the client. Due to the structure of Upwork, you will never receive 100% of your tax revenue (if you add it to your rate), which is why I recommend consulting with a tax professional or similiar organization.  Your local government may even be able to assist. 

Ace Contributor
Dylan G Member Since: Sep 9, 2015
5 of 5

Virginia F wrote:

Simply factor that in to your hourly rate ... plus the *cut Upwork takes, of course.

 

*Which can be reported as a business expense on your taxes.


Hi Virginia, just wanted to clarify -- that can only be reported as a business expense if you claim the income earned as the full amount before Upwork's cut, right? Which would unfortunately result in less take-home income overall, by my understanding of the math.

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