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Thread: So, how much should I put aside for taxes?

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    Senior Member Jaden_GD's Avatar
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    Dizzy So, how much should I put aside for taxes?

    Monthly? I live in Wisconsin. I apologize if this has been asked already...I'm just really clueless! I'm going to be returning to dancing soon, and '09 will be my first year filing for taxes.

    Help?

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    Banned Melonie's Avatar
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    Default Re: So, how much should I put aside for taxes?

    15.3% from dollar one for Social Security (self-employment) tax ... then a progressive scale from 10% to 36% depending on your total annual earnings for federal income tax ... plus a few extra percent for Wisconsin. 30% is a fairly reasonable shot in the dark value.

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    God/dess Zofia's Avatar
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    Default Re: So, how much should I put aside for taxes?

    30% usually works out well enough. Remember, you will have to file quarterly estimates. Go to http://www.irs.gov/pub/irs-pdf/f1040es.pdf for the form and instructions. The instructions also include the tax table. The short version of the instructions is this: 1. estimate your 2009 earnings; 2. estimate and subtract your deductions; 3. estimate and subtract your exemptions, that gives you your estimated annual taxable income. Then, figure your tax from the simplified tax table and add 15.3% for self employment tax. Enter any penalties and back taxes owed from 2008 if the result is zero, you are done. If the result is more than zero, multiply it by .90, and this is your annual estimated tax. If this amount is less than $1,000, you don't need to file an estimate. Keep your paperwork though. If it is more than $1,000 you need to file and pay. The IRS takes checks, credit cards and they even have their own electronic payments system.

    You will have to do the same thing for Wisconsin and any other state you dance in. Here is the Wisconsin form 1-ES instructions: http://www.revenue.wi.gov/forms/2009/09d-101a.pdf Avoid California, unless you plan on doing a lot of dancing there. Doing a little business in California will subject you to far too much tax to ever be worth it. Wisconsin like the Feds will take efiled tax returns. Your Wisconsin estimates are done just like the federal ones, only at the state rate. Again, you 90% of one quarter of your estimated annual tax bill, each quarter.

    The kicker is, you have to estimate your schedule C income and expenses now, for the whole year to get the top line number on your state and federal estimates! So, I recommend you get a schedule C and start filling it out now. Include all the miscellaneous deductions you are entitled to, but don't over estimate them. (Remember, business expenses are deductible on schedule C, not as itemized deductions on your 1040A.

    HTH
    Z
    Last edited by Zofia; 03-12-2009 at 06:14 AM.

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    Veteran Member Robertjordan's Avatar
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    Default Re: So, how much should I put aside for taxes?

    Quote Originally Posted by Jaden_GD View Post
    Monthly? I live in Wisconsin. I apologize if this has been asked already...I'm just really clueless! I'm going to be returning to dancing soon, and '09 will be my first year filing for taxes.

    Help?
    It also depends on how you are going to file. Do you have a corporation or are you going to file as a sole proprietor? Do you receive a 1099 or W-2? What do you estimate that your earnings are going to be? Are you single? Do you have dependants? Etc, etc.

    30% is a reasonable assumption for an average earnings single person filing as a sole proprietor.

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    Senior Member Jaden_GD's Avatar
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    Default Re: So, how much should I put aside for taxes?

    Thanks everyone for your help. Things are finally clearing up a bit for me...time to go visit an accountant!

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