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Thread: Tax Tables/Rates

  1. #1
    Member Scarlett's Avatar
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    Default Tax Tables/Rates

    Hey everyone,
    I started dancing early this year. I went and talked to an accountant about two months ago about what I need to do for taxes. He basically told me that because I had missed the quarterly estimated tax payments for ind. contractors to just save up and we'd take care of it in 2004. This is fine and dandy but I have no idea how much I'm supposed to be putting aside.
    Does anyone know what percentage I shoud count on for my tax owed, state and federal? For example, if my monthly gross is $1500, what is my tax on that going to be? And if I grossed $2000 one month, how do I figure that out?
    Any help would be appreciated, Thanks!

    Scarlett

  2. #2
    Banned Melonie's Avatar
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    Default Re:Tax Tables/Rates

    Scarlett, if you're only grossing $1500 to $2000 a MONTH you don't have much to worry about in the way of income taxes ! Even at a $2000 per month + $24,000 per year, your tax percentages will still be really low. This isn't exact since your other finances also affect your taxes but an educated guess assuming you are single and don't own a home ...

    Federal Income Tax 12% * $24,000 = $2,880
    California State Tax 3% * $24,000 = $640
    Self Employment Tax 7.5% * $24,000 = $1,800
    Your total tax rate is probably around 22.5% and the total tax due next April 15th if you worked all through 2003 and didn't pay estimated taxes would be = (2880+640+1800)=$5,320 assuming you have no tax deductions whatsoever, less if you do.

    The IRS normally charges a 10% penalty (in your case an extra $532) if you didn't send in estimated tax payments on June 15th, Sept 15th and this coming Jan 15th for the income you earned in the 2nd, 3rd and 4th quarters of 2003. However, since this is your first year working you are exempt from this penalty - but you won't be next year.

    However, you will also have to pay the 1st quarter 2004 estimated taxes on April 15th along with the taxes you owe on 2003 income, adding an additional $5,320/4=$1330 on top of the $5320, for a grand total of somewhere around $6650 you'll have to pay out next April 15th. Next year you'll need to save out 22.5% of your earnings every week, and send the money to the IRS and Cal state tax dept before those estimated tax dates throughout the year so you don't get stuck with a huge tax bill plus a 10% penalty in April 2005.

    Now for example if you were grossing $2000 a week instead of $2000 a month, the situation would be much different

    Federal Income Tax 29%
    California State Tax 9%
    Self Employment Tax 7.5%
    if this were the case your total tax rate would be somewhere around 45.5%, and if you had earned $2000*52weeks=$104,000 in 2003 you would owe somewhere around $47,000 by this coming April 15th, plus an additional $11,800 in 1st quarter estimated taxes !

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    God/dess montythegeek's Avatar
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    Default Re:Tax Tables/Rates

    To add to Melonie's good advise
    1 Check out the thread started by Miss Molly at
    http://www.stripperweb.com/forum/ind...;threadid=3542

    Also Both H&R Block's and Turbo Tax are in the stores NOW. (I just came from COMPUSA and saw both). YOu can figure 2003 out really close and pay the 4th quarter installment by January 15th and cut the penalty should there be one. I am not sure Melonie is correct if you had minor amounts of "regular" wage income last year and filed last year. I may have just read the 2 posts too fast. If for eample your income was primarily last half (say you were in school) you can catch up on the estimated payments you missed and cut the penalties if they exist. It would also reduce the temptation to spend the money before you settle up. But you can know real close what the tab will be before the year is out an Jan 15th comes around.

    As for state I have no California experience. I think you are Calif. Also, states can be nastier than the IRS on penalties in % terms. The State Department of Revenue (usual name) should give you good information on estimated taxes.

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    Veteran Member NVJosh's Avatar
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    Default Re:Tax Tables/Rates

    Your accountant didn't give you the greatest advice. You are charged a penalty up until you pay your taxes, so even though you've missed the first 3 quarterly estimates, the sooner you pay in the amount due, the sooner the penalty stops running. Also, if you had no tax liablity in 2002, or less than $1,000, and you filed a return, there will be no underpayment penalty.

    Melonie's calculations are a bit off (for instance, you get standard or itemized deductions, and a personal exemption) and much of your income may be taxed at 10%, not 12%, however the self-employment tax is higher, so its probably close to a wash. However, your CPA should be able to work with you to find deductions to get that $1,500 - $2,000/month of gross income down to a much lower net income. If you're lucky, the only thing you'll end up with paying some self-employment tax, which may be minimal.

    If your CPA isn't doing the job for you, send me a message and I'll be happy to help out (at standard rates, of course).

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