California Woman Shocked at Huge Tax Bill: 'How Am I Going to Survive?'

A Californian woman was shocked to find her tax bill rivaled her student loan debt and is now wondering how she will survive with the $26,000 taken from her income.

Every year, many taxpayers are startled to find their income as an independent contractor or business owner taxed at a higher rate than they imagined.

A TikToker who goes by the name of @_WestCoastFairy posted a video detailing her woes this tax season and now is unsure how she will go about paying her necessities.

"I literally can't breathe," the content creator said in her video. "I have so much anxiety. I just want to cry. I don't know what to do anymore."

_WestCoastFairy said she did everything right when filing her taxes and managed to make six figures last year. Despite her hard work, she was frustrated to learn $26,000 would be taken away from her earnings.

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The TikToker said she put away the exact amount she was told to put away for taxes as an independent contractor.

"It doesn't matter," she said.

Around $18,000 of the taxes went to the federal government, while the state of California wanted an additional $8,000. This is on top of her out-of-pocket costs for health insurance, which were around $10,000 for the year.

"That is more than my student loan that I owe," _WestCoastFairy said. "How the f*** am I going to survive? I don't know what to do. It's so scary."

The TikToker, despite achieving many Americans' goal of a six-figure salary, said she is still struggling to make ends meet while living in one of the most expensive areas of the country.

"I made it to six figures," _WestCoastFairy said. "I made sure to put my money away. I barely spend. I don't do my hair. I don't do my nails. I don't do my lashes. I don't do any of it."

Her dilemma reflects a dark reality for many Americans, as the content creator said she just started to attempt to make friends again because she was too concerned about her finances previously.

_WestCoastFairy said her mother originally immigrated to the United States to give her a better life, and the reality has not lived up to the American dream.

"I'm lost," she said.

Viewers were quick to note that a 30 percent salary tax is the norm across America for many tax brackets. From a financial adviser's viewpoint, the importance of accurately calculating the amount of taxes you will owe as an independent contractor cannot be overstated.

Kevin Thompson, certified financial planner and founder of 9i Capital Group, said the TikToker's strife punctuates the difficulties that arise when paying taxes while self-employed.

"What she may not have realized, besides living in California, the dreaded self-employment tax that she now is facing," Thompson told Newsweek. "Instead of paying one half as she would have as a W-2 employee, having the other half covered by employer, she is having to pay the full amount being an independent contractor."

The "double whammy" independent contractors face in California can be especially challenging, as the state taxes an additional 7.25 percent plus Social Security and Medicare levies, Thompson added.

Calculating how much you should save for tax filing purposes can also be made even more complicated if you're doing this based on income of the previous year.

"Another unfortunate reality is that the safe harbor amount she believed she was paying correctly was likely on a lower income amount from the previous year," Thompson said. "It is important to fully understand what 'business ownership' truly means before you step off into the world of being an independent contractor."

As the TikToker held back tears, Alex Beene, financial literacy instructor for the state of Tennessee, said she highlights the importance of doing your homework before diving into a side hustle or business.

"Most Americans who go this path fail to realize there could be a heavy tax bill due if they don't pay as they go along," Beene told Newsweek.

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"You can pay taxes quarterly on business income to soften the blow that would come by paying them all at once at year's end. Take advantage of this process and set a plan in motion to make sure you don't find yourself with thousands of dollars owed to the IRS when you go to file."