Tax Return Example
Hi everyone,
I am having a bit hard time understanding what taxes in home daycare providers pay. I have searched the internet without luck, so maybe anyone can give me an example of how the whole tax system works. Let's say I am married, filling jointly in the state of CA. For the sake of simplicity let's say, the revenue from my daycare is 100k and my husband works and gets a salary of 100k. Let's say I have calculated all my business related expenses which amount to 20k, so I am left with 80k taxable income. Questions 1 I pay 15,3% self employed tax on the 80k. Right? Question 2 I pay 24% federal tax on the 100k revenue? Or is this 24% also on 80k??? Question 3 Any other taxes I have to pay?? Any specific state taxes? If you can share your own examples that would be great. Thank you! |
Welcome to the forum. likethis
Here is a list of deductions that are searchable in our TAG search: https://www.daycare.com/forum/showthread.php?t=56549 And some threads regarding Time/Space Percentages: https://www.daycare.com/forum/tags.p...ace+percentage |
taxes
Originally Posted by Vanka: #2 - You will add your profit ($80,000) to your husband's gross income ($100,000) on Form 1040. You won't pay 24% federal income tax on this. You will pay tax on your family's adjusted gross income. So you would subtract from $180,000 your standard deduction ($24,000 for a married couple) or your itemized expenses from Schedule A if they are higher. You would also subtract your qualified business income deduction, which is a new deduction for 2018. #3 - You will also owe state income taxes on your family's adjusted gross income. Each state has its own rules about how to calculate your family's adjusted gross income. |
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