Can you help me figure out my tax liability for 2006?

Question

I am self-employed. I made $13,138.39 last year. How much should I have paid to the government for federal income tax, social security tax and medicare tax? I am married with a child and have deductions and credits, but I am curious about how much I owe before this is taken into consideration.

Thanks!
Kari

Answer 1

go to H&R block website, they have a tax calculator to help you with an estimate.

Answer 2

The self employment tax (12.4% for social security and 2.9% for medicare) is based on your self employment income (after expenses) and is not affected by marital status or family size. What deductions do you have to offset your self employment income? If you do not have any, then you can figure that 15.3% will be your self employment tax, BUT you can also deduct half of your self employment tax as a deduction.

As for your federal tax liability, you did not mention whether your husband works. If he didn't, then just the standard deduction for married filing joint, and the personal exemptions for yourself, your husband and your child would wipe out the income and you would not have any tax due (although you still would owe self employment tax).

Answer 3

Many factors come into play when calculating tax liability. Just a few examples are: filing status, age, itemized deductions, credits, etc.

One suggestion I would make is to try a tax estimator such as the one linked below. That way you can allow for these factors.

I have seen many self-employed people run into problems at the end of the year because they haven't set aside enough to cover taxes. The SE tax (IRS link below) especially catches people of guard. I recommend to my self-employed clients start a "tax fund" in a money market or savings account. This will act similar to withholding in spreading the tax burden over the entire year. Your accountant should be able to help you come up with a weekly/monthly amount based on your circumstances.

Answer 4

Not nearly enough info to answer. Is the amount you "made" net of expenses, or do you still have to subtract those? Are you filing joint, or married filing separately? If you file separately, then some of the credits you'd otherwise be eligible for are lost. If you're planning to file joint, what income does your spouse have? Is he planning to itemize? If he does, and you file separately, then you must itemize also, but only one of you can claim each deduction.

Self-employment tax is 15.3% of the net. If the number you give already has expenses subtracted, then you'd owe $2010 for self-employement tax. Your income tax on the amount depends on the answers to some of the questions above.

Answer 5

You need a professional tax preparer. There are many many things to take into consideration in figuring your tax that can only come from a face to face meeting. Bring ALL records.