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Old 02-07-2017, 08:52 AM
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LittleScholars LittleScholars is offline
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Default 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.
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Old 02-07-2017, 10:18 AM
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Default taxes

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Originally Posted by LittleScholars View Post
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.
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Old 02-07-2017, 10:43 AM
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Originally Posted by TomCopeland View Post
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).
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