Maximise Tax Deductions for Second Job
Tax Impact of a Second Job: Maximise Your Refund
Taking on a second job can be a great way to boost your income, but it's important to understand how it impacts your tax obligations in Australia. We'll help you understand the tax implications, avoid common traps, and maximise your tax return.
Contents
- Understanding Tax on a Second Job
- Tax Deductibility of Travel Between Workplaces
- Common Traps to Avoid
- Examples
- Gotax Tax Advice
Understanding Tax on a Second Job
When you have a second job, it’s crucial to be aware of how it affects your overall tax situation:
- Tax-Free Threshold: You can only claim the tax-free threshold (currently $18,200) from one employer. Claiming it from both employers can result in a tax debt at the end of the financial year.
- Higher Tax Rates: Income from your second job is taxed at your marginal tax rate, which could push you into a higher tax bracket.
- Medicare Levy: Your total income from both jobs will be considered for the Medicare Levy, which is 2% of your taxable income.
Tax Deductibility of Travel Between Workplaces
If you find yourself travelling directly from one job to another, you may be eligible to claim a deduction for these travel expenses. Here’s what you need to know:
- Eligibility: Travel between two different workplaces is generally deductible if both jobs are separate sources of income and the travel is directly between the two places of employment.
- Records: Keep detailed records of your travel, including dates, distances, and the purpose of the travel to substantiate your claims.
- Modes of Transport: Whether you use your own car, public transport, or another mode, the cost of travel can be claimed as a deduction.
Common Traps to Avoid
- Incorrect Tax-Free Threshold Claims: Ensure you only claim the tax-free threshold from one employer. If you’re unsure, it's safer to claim it from your primary job.
- Underestimating Tax Withholding: Your second employer might withhold tax at a lower rate. You can request them to withhold more tax to avoid a large tax bill at the end of the year.
- Ignoring HECS-HELP Repayments: If you have a HECS-HELP debt, inform both employers so they can withhold additional amounts to cover your repayments.
Examples
Example 1: Claiming the Tax-Free Threshold
Emily works full-time as a teacher and takes on a part-time job at a retail store. She claims the tax-free threshold from her teaching job. For her retail job, she does not claim the tax-free threshold, ensuring that her second employer withholds the correct amount of tax.
Example 2: Managing HECS-HELP Repayments
James has a full-time job and a second job on weekends. He has a HECS-HELP debt. James informs both employers about his debt, so they withhold additional tax to cover his HECS-HELP repayments, avoiding a surprise bill at tax time.
Example 3: Deducting Travel Between Workplaces
Sarah works two part-time jobs, one as a barista in the morning and another as a tutor in the afternoon. She travels directly from the café to the tutoring centre. Sarah keeps a logbook of her travel and claims the travel expenses between these workplaces as a tax deduction.
Gotax Tax Advice
Tax Tip: Consider using the ATO’s online tax withholding calculator to ensure your employers are withholding the correct amount of tax from your income. This can help you avoid a large tax bill and ensure you’re meeting your tax obligations throughout the year. Additionally, keep meticulous records of any travel between workplaces to maximise your deductions using the Gotax Deduction Grabber App. Download now...
By staying informed and proactive about your tax obligations when taking on a second job, you can maximise your refund and ensure you remain compliant. For more personalised tax advice and to streamline your tax return process, visit Gotax.com.au – Australia's easiest, cheapest, and smartest online tax service.
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