Anyone here a tax whiz?

Discussion in 'Community Discussion' started by StephenCampbell, Jan 28, 2012.

  1. StephenCampbell macrumors 65816

    Joined:
    Sep 21, 2009
    #1
    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!
     
  2. miles01110 macrumors Core

    miles01110

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  3. maflynn Moderator

    maflynn

    Staff Member

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    #3
    Asking for tax advice on an internet forum, is not the wisest move.

    Consult a tax expert to determine your best move.
     
  4. Shrink macrumors G3

    Shrink

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    #4
    Agree^^^

    Unless there is a tax accountant among us who is willing to give tax advice pro bono(!!!), you need to talk to a CPA for good information.:D
     
  5. rdowns macrumors Penryn

    rdowns

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    #5
    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.
     
  6. mobilehaathi macrumors G3

    mobilehaathi

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    #6
    According to my calculations, you should be paying about 42.3%.

    But I'm not a tax professional, and I just randomly chose that number.
     
  7. Fazzy macrumors 6502

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    #7
    Just send us your name, address, social security and bank details and your tax problems will be gone in no time! :D
     
  8. iJohnHenry macrumors P6

    iJohnHenry

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    #8
    When I saw your name, on the sub-forum list as the last poster, I thought "WTF?".

    Now it makes sense. You live in Africa. :)
     
  9. Fazzy macrumors 6502

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    #9
    Hah, didn't quite have time to write the obligatory grammatically incorrect, long winded email, so I kept it short and sweet.
     
  10. Macky-Mac macrumors 68030

    Macky-Mac

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    #10
    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.
     
  11. StephenCampbell thread starter macrumors 65816

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    Sep 21, 2009
    #11
    Wait, so you're saying I get the standard deduction in addition to deducting business expenses?
     
  12. mobilehaathi macrumors G3

    mobilehaathi

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    #12
    He is saying you need to find a legitimate source of tax information and not to rely on us stooges on the internet.
     
  13. Macky-Mac macrumors 68030

    Macky-Mac

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    #13
    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
     
  14. iJohnHenry macrumors P6

    iJohnHenry

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    #14
    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. ;)
     
  15. charlieroberts macrumors 6502a

    charlieroberts

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    #15
    LOL! hahahaha
     
  16. iJohnHenry macrumors P6

    iJohnHenry

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    #16
    Hell, no. :(

    If an effective tax rate of ~15% is good enough for Mitt Romney, it's good enough for the OP.
     
  17. mobilehaathi macrumors G3

    mobilehaathi

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    #17
    True, but the OP wouldn't know if there was a tax expert floating around giving free advice or just some twisted individual making everything up for a good show.;)
     
  18. thatoneguy82 macrumors 68000

    thatoneguy82

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    #18
    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.
     
  19. bdodds1985 macrumors 6502a

    bdodds1985

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    #19
    I don't even like looking at or doing my own taxes why the hell would I want to do yours? ;)
     
  20. Avatar74 macrumors 65816

    Avatar74

    Joined:
    Feb 5, 2007
    #20
    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.
     
  21. mobilehaathi macrumors G3

    mobilehaathi

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    #21
    It is hardly ironic that you work for the company whose product you just promoted.;)
     
  22. iJohnHenry macrumors P6

    iJohnHenry

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    #22
    That's pretty weak "promotion". There was no audible/visual discomfort at all. :rolleyes:
     
  23. mobilehaathi macrumors G3

    mobilehaathi

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    #23
    The best promotion is that which seems objective!:D
     
  24. Macky-Mac macrumors 68030

    Macky-Mac

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    #24
    if you're truly filing as self-employed, then yeah.


    turbotax online, or something like it, would be a good tool for the poor OP.
     
  25. iJohnHenry macrumors P6

    iJohnHenry

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    #25
    If he were poor, then yes, for most offer a means test, and don't charge below a certain income level.

    I don't think he is in that particular segment of the population. ;)
     

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