Expected Taxes
Submitted by Anonymous on Wed, 2009-06-17 14:08.
Linda,
Im having problems projecting my estimated taxes for this year. Im a self-proprietor earning 70k last year and projected this year. Although its 15.3% taxes I still found myself owing last year. Could you re-check my math to see what I should be paying for this year?
AJ
anjo1125@yahoo.com
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Calculating Estimated Taxes
Hi AJ,
I'm going to assume that you have $70K of net income, meaning after you deducted all the expenses for your business you have $70K of self employment income.
If that's then case then your estimated payments (due 4/15, 6/15, 9/15 & 1/15) need to include both your estimated self employment income & income tax. The SE tax is pretty simple it's 15.3% of 92.35% of your net income. So in this example the SE tax would be ~$9,891.
Figuring the income tax depends entirely on your particular situation. Let's assume that you have no other income than your SE income, you are a single filer & you do not itemized your deductions and have no other tax credits available to you.
In this example, your taxable income for 2009 would be $60,650 (70K income - 5700 std deduction - 3650 personal exemption). The tax on this would be calculated based on the 2009 Tax Rate Schedule would be ~$11,350. (2009 rates are available here.)
So the total estimate tax payments you need to make is 21,241 ($9891 SE Tax + $11350 income tax). These payments can be made in 4 equal payments on Form 1040-ES. Or you can make these payments electronically at EFTPS.gov
I hope this helps you figure out how to calculate your taxes due.
Good Luck!
L:)