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Tax planning when you work part-time

While some Americans only think about taxes in the weeks before April 15, part-time workers will likely need to keep on top of tax planning year-round. By knowing the rules, paying attention to withholdings and keeping an eye out for benefits all year, you’ll be able to maximize benefits and minimize prefiling stress.

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What qualifies as part-time work?

For many companies, if you work fewer than 30-35 hours per week you’re considered part-time. If you are an independent contractor or freelancer working part-time for multiple clients, you may also be considered self-employed.

22% of American workers are part-time.

Source: Bureau of Labor Statistics, 2021

Are you aware of withholding?

In most full-time jobs, employees establish a tax withholding amount when they start work, then forget about it. But for part-time workers, tax withholding may require more planning.

If you …

Have multiple jobs

Your employers may collectively withhold too much or too little taxes from your paycheck. You can be proactive by checking the IRS withholding calculator and asking your employers for new Forms W-4 to update your withholdings accordingly.

Work part-time as an independent contractor

Your client likely won’t withhold any taxes from your pay. Plus, you’re responsible for Social Security and Medicare taxes. As an employee, you split these taxes with the employer; as a contractor, you’re responsible for the full amount. You can find payment details on the IRS website.

12.4% Social Security tax1
2.9% Medicare tax
0.9% Additional Medicare tax (for certain higher earners)

Look for deductions

Here are some of the more common deductions that may benefit self-employed, part-time workers:

per mile2
Source: IRS

Mileage: Travel between two different jobs may be deductible.

Business expenses: You may be able to deduct certain unreimbursed expenses, such as union dues or subscriptions to professional journals.

Home office: If you work from home, you may be able to deduct associated expenses.*

Uniform and tools: Required clothing or certain tools may be able to be deducted, as long as they’re not reimbursed or suitable for everyday use.

Insurance and fees: Unreimbursed business liability insurance premiums may be tax-deductible.

Health care: You may be able to deduct premium costs.

*Home office space must be used exclusively for business, and the IRS has many requirements.

Keep in mind that to claim these deductions, you will be required to file Schedule C of your Form 1040 income tax return.

Take advantage of tax credits
You may qualify for these if you work part-time.

Earned Income Credit (EIC):
The EIC is meant for working people with low to moderate income. It’s a refundable tax credit—you may qualify for a refund if your tax credit is greater than the taxes you owe.

Premium Tax Credit:
If you bought health insurance through the federal marketplace—especially if it was because you didn’t have access to employer-sponsored insurance—you may qualify for a tax credit.

Now that you know ...

You can plan ahead and make the most of the deductions and credits that can help improve your bottom line at tax time. For additional details, check the IRS website.

  1. For 2023, Social Security tax is owed on wages, compensation and self-employment income up to $160,200.
  2. The mileage rate is subject to change periodically. Speak to your tax advisor or visit the IRS website to ensure you are using the correct amount.
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The material provided on this website is for informational use only and is not intended for financial, tax or investment advice. Bank of America and/or its affiliates, and Khan Academy, assume no liability for any loss or damage resulting from one’s reliance on the material provided. Please also note that such material is not updated regularly and that some of the information may not therefore be current. Consult with your own financial professional and tax advisor when making decisions regarding your financial situation.

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