Anyone here a tax whiz?

[StephenCampbell]

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!

 

[miles01110]

You should ask a tax professional.

 

[maflynn]

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

Consult a tax expert to determine your best move.

 

[Shrink]

You should ask a tax professional.

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.😀

 

[rdowns]

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.

 

[mobilehaathi]

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.

 

[Fazzy]

Just send us your name, address, social security and bank details and your tax problems will be gone in no time! 😀

 

[iJohnHenry]

Just send us your name, address, social security and bank details and your tax problems will be gone in no time! 😀

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. 🙂

 

[Fazzy]

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. 🙂

Hah, didn't quite have time to write the obligatory grammatically incorrect, long winded email, so I kept it short and sweet.

 

[Macky-Mac]

....

Business expenses = $5,950 (standard deduction)

.....

Is this right?

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.

 

[StephenCampbell]

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.

Wait, so you're saying I get the standard deduction in addition to deducting business expenses?

 

[mobilehaathi]

Wait, so you're saying I get the standard deduction in addition to deducting business expenses?

He is saying you need to find a legitimate source of tax information and not to rely on us stooges on the internet.

 

[Macky-Mac]

He is saying you need to find a legitimate source of tax information and not to rely on us stooges on the internet.

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 😛

 

[iJohnHenry]

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 😛

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. 😉

 

[charlieroberts]

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.

LOL! hahahaha

 

[iJohnHenry]

LOL! hahahaha

Hell, no. 🙁

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

 

[mobilehaathi]

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. 😉

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.😉

 

[thatoneguy82]

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.

 

[bdodds1985]

I don't even like looking at or doing my own taxes why the hell would I want to do yours? 😉

 

[Avatar74]

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.

 

[mobilehaathi]

let something like Turbotax Online walk you through it.... (ironically, I work for Intuit)

It is hardly ironic that you work for the company whose product you just promoted.😉

 

[iJohnHenry]

It is hardly ironic that you work for the company whose product you just promoted.😉

let something like Turbotax Online

That's pretty weak "promotion". There was no audible/visual discomfort at all. 🙄

 

[mobilehaathi]

That's pretty weak "promotion". There was no audible/visual discomfort at all. 🙄

The best promotion is that which seems objective!😀

 

[Macky-Mac]

Wait, so you're saying I get the standard deduction in addition to deducting business expenses?

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

let something like Turbotax Online

That's pretty weak "promotion". There was no audible/visual discomfort at all. 🙄

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

 

[iJohnHenry]

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

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. 😉