I am a part-time sales consultant and I just wanted to know, when writing off something, for example $10.00 in office supplies, how much $$ does this correlate to me getting back? For example, bottom line, how much am I getting back in cash off of $10.00 in office supplies? And mileage as well? Thanks!
2006-07-17 01:02:41 · 4 answers · asked by Jenn B 2 in Business & Finance ➔ Taxes ➔ United States
3eleven is right.
I like to think of it as who you are giving your money to. In part, you can justify spending more (supplies, chairs, etc.) because you are getting a "discount".
Assume you always pay in income taxes, 25% marginal tax bracket.
If you had the choice to buy something today (for business purposes), you'd really only be 'paying' 75% of it since the other portion would have gone to taxes if you wouldn't have purchased it. So, the $25 was already owed, you just picked who it went to - the government or the store.
I have a client that likes to think like that way too often, but it is a nice thought when questioning purchases on things that are deductible.
2006-07-17 03:01:39 · answer #1 · answered by Molly 6 · 0⤊ 0⤋
How much you are saving depends on your actual tax bracket. If you make $100 and spend $10 in office supplies then you claim $90. If you are in a 15% tax bracket then you pay $13.50 in tax rather than $15. The IRS lets you take off a set amount per mile. It is different each year. How much you get back when you file your taxes is influenced by how much you have your employer take out. If you are self employed it is a totally different situation because then you have to pay Estimated Taxes quarterly. Talk to your tax consultant.
2016-03-26 21:25:30 · answer #2 · answered by Barbara 4 · 0⤊ 0⤋
Any business or personal deduction reduces your personal tax liability (assuming you report business income on schedule C or through a flow-through entity)....depending on your personal marginal tax rate, the savings on a $10 deduction could be anywhere from $1.50 to $3.50. This may not sound like much, but it will add up.
2006-07-17 01:18:45 · answer #3 · answered by 3eleven 4 · 0⤊ 0⤋
In addition to the regular tax, you will be saving 15.3% of S.E. tax. So if you spend $10 and are in the 10% tax bracket, you will save $1.53 in S.E. Tax (social security) and about another $1 in regular tax. So spending $10 will save you about $2.53.
The issue should not be the amount of tax saved but whether you NEED those supplies to operate your business.
2006-07-17 07:08:24 · answer #4 · answered by extra_37 4 · 0⤊ 0⤋