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Anyone here a tax whiz?

S

StephenCampbell

macrumors 65816
Original poster
Sep 21, 2009
1,043
54
I tried calling the IRS to ask them directly, but the wait time on the phone is too great.

As a self employed person, I basically just need to understand exactly what I owe in income tax and self employment tax. Please let me know if I've got this right.

Paychecks for the year 2012: $30,000

1. Federal income tax:

Standard deduction: $5,950
Personal exemption: $3,800

Income to be taxed federally: $20,250.

2. Self employment tax:

92.35% x $30,000 = $27,705
Business expenses = $5,950 (standard deduction)

Income taxed by the self employment tax: $21,755.

13.3% = $2,893 for self employment tax (social security and medicare)

Then... to amend part 1:

0.5 x $2,893 = $1,446.50

$1,446.50 further deduction for federal income tax.

New total to be federally taxed: $18,803.50

$2,396 owed in federal income tax.

$2,893 for self employment tax.

Total: $5,289. Effective total tax rate: 17.6%.

Is this right?

Thanks!
 
Asking for tax advice on an internet forum, is not the wisest move.

Consult a tax expert to determine your best move.
 
Use one of the hundreds of online tax sites to estimate your taxes. Won't cost you anything and it will guide you through with questions and may even find more deductions.
 
StephenCampbell said:
....

Business expenses = $5,950 (standard deduction)

.....

Is this right?
Click to expand...

the standard deduction isn't used for business expenses.

I'm not a tax whiz either but......if you have more than $5000 in actual business expenses then you have to file schedule C where you'll itemize those expenses. If your expenses are less than $5000 you can use schedule C-EZ where you enter them as a lump sum (again, NOT a standard deduction, there's isn't any such thing for business expenses. You use the total of actual expenses)

Your self-employment taxes are figured using schedule SE based on your profit from your business.....you'll use schedule C or C-EZ to determine your profit/loss

Then you go to your Form 1040 where the personal exemption and standard deduction come into play.

I strongly recommend you get some tax software (online or for your own computer) to guide you through your taxes.
 
Macky-Mac said:
the standard deduction isn't used for business expenses.

I'm not a tax whiz either but......if you have more than $5000 in actual business expenses then you have to file schedule C where you'll itemize those expenses. If your expenses are less than $5000 you can use schedule C-EZ where you enter them as a lump sum (again, NOT a standard deduction, there's isn't any such thing for business expenses. You use the total of actual expenses)

Your self-employment taxes are figured using schedule SE based on your profit from your business.....you'll use schedule C or C-EZ to determine your profit/loss

Then you go to your Form 1040 where the personal exemption and standard deduction come into play.

I strongly recommend you get some tax software (online or for your own computer) to guide you through your taxes.
Click to expand...

Wait, so you're saying I get the standard deduction in addition to deducting business expenses?
 
mobilehaathi said:
He is saying you need to find a legitimate source of tax information and not to rely on us stooges on the internet.
Click to expand...

well, us stooges on the internet are telling him he should get competent experienced help and not try to do his taxes himself since he clearly hasn't a clue as to what's what about his taxes..........don't you think that's advice he should rely on :p
 
Macky-Mac said:
well, us stooges on the internet are telling him he should get competent experienced help and not try to do his taxes himself since he clearly hasn't a clue as to what's what about his taxes..........don't you think that's advice he should rely on :p
Click to expand...

Perhaps he was only speaking for himself, for he has no way of knowing that we don't have a least one tax expert here. ;)
 
Used the H&R Tax Software. It's a great program that guides you through the process and makes you have deductions that you didn't know you could claim. And it's all legal and correct. My personal deduction was 35,000K but before I used H&R block, it was below the standard deduction and I was going to owe IRS money. Anyway, for the past two years, I've gotten over $10,000 for federal/state for 2010 and $9,000 for 2011. It's a great program.


And oh, nothing was fabricated at all. There is solid proof of everything claimed for in case of an IRS audit.
 
Talk to an accountant. Seriously. At least get an initial consult, and if they think that you've got at least enough knowledge to let something like Turbotax Online walk you through it, then you're good to go from there.

I'm a professional business analyst (ironically, I work for Intuit) and I wouldn't tell you if you're right or not... I could be wrong, and then you'd be in hot water.
 
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