How To Calculate Taxes Owed?
 

I'm in New York State and have an $11,000 profit (I'm new to this and perhaps didn't write off all I could).

For some reason, I anticipated paying 20% in taxes, but my accountant gave me a number closer to 43%. Can you help me understand why? I imagine she's correct, but I'm trying to learn more about this.

taxes
 

Originally Posted by LittleScholars:
I'm in New York State and have an $11,000 profit (I'm new to this and perhaps didn't write off all I could).

For some reason, I anticipated paying 20% in taxes, but my accountant gave me a number closer to 43%. Can you help me understand why? I imagine she's correct, but I'm trying to learn more about this.

It's hard to know the correct answer. You will owe about 15% Social Security tax. You will owe federal income tax based on your family's adjusted gross income. This could be anywhere from 15%-28% or higher. You will also NY state income tax which could be up to 8% or so. So, it's possible you will owe 43% tax on your profit.

You want to be sure you are claiming all allowable business deductions because for every $100 of a deduction you will reduce your taxes by about $43.

Originally Posted by TomCopeland:
It's hard to know the correct answer. You will owe about 15% Social Security tax. You will owe federal income tax based on your family's adjusted gross income. This could be anywhere from 15%-28% or higher. You will also NY state income tax which could be up to 8% or so. So, it's possible you will owe 43% tax on your profit.

You want to be sure you are claiming all allowable business deductions because for every $100 of a deduction you will reduce your taxes by about $43.

Ok, great. I'm re-working numbers now, and not depreciating our house had a lot to do with the higher number. This is my first year, so we were expecting it to be much lower (we didn't really see a profit that high).