Accountants help! Is 10% of your paycheck taken out in taxes not enough or a lot?

Question

I'm debating on goin to HRBlock this year. We usually do, but I'm not sure if our return will be worth it this year. One job had 10%taken out for taxes, just worked out that way. $10,000 gross, 1,000 taken out, give a few dollars. Then I have a small business with 6,000 gross, and a job of 1200.00 w/ nothin taken out and another job of about 5,000 w/ no taxes taken out either. i have a spouce and 2 kids to claim. anyone think the return will be big enough for it to be worth paying a tax company so I can walk out w/ a check?

Answer 1

Since you say "we", I'm assuming that you are filing a joint return with your spouse. My answer will be on that assumption. I'm also assuming that at least one of the kids is under 17, so you can get the child tax credit for that child.

You would not owe income taxes. But you will owe self-employment tax on the $6000 from your small business - that will come to around $835. So you'll still be OK, since the $1000 you had withheld from the one job will cover it. You'll end up with a refund somewhere around $150. You'd probably also get an Earned Income Credit that could increase that could be over $3000.

If you have other options than H&R Block for getting your taxes done, would be a good idea. Even if you buy TurboTax or something like that, would still come out ahead rather than going to H&R. And if you do, don't take their loan that lets you walk out with a check - you'll save a lot of money in their fees and interest if you just have your refund direct deposited, and you should have it within a couple weeks, maybe less. If you're considering their loan option, at least ask them how much their fees are WITHOUT the immediate check, then after they tell you that, ask them how much it would cost WITH it, so you know what you're paying.

Answer 2

It sounds to me that you should get the Earned income credit which by itself will be a substantial refund even with your self employment small business. You mentioned Gross income so I assume you have expenses to offset at least some of that. Personally I find H&R to be very expensive compared to a locally owned firm in almost any area but I admit I am biased as this is what I do. With the income level you mentioned 10% is sufficient, but if your business grows and your net income rises with it then no 10% would not be enough.

Answer 3

I'd bet a steak dinner that your're going to OWE taxes this year. I may be wrong on that, though. That small business is going to cost you 15.3% in self employment taxes alone on that $6,000 (though that will be after any deduction for business expenses, if any).

If you qualify for the EITC, and it looks as if you should, it may save your bacon. But your return may be complicated enough that professional help would be worth while.

BTW, even if you do have a refund coming -- skip the option to walk out with a check! You'll pay a small fortune in rip-off fees just to get your money a week sooner. Pay the prep bill in cash and have your refund sent directly to your bank.

Answer 4

10% is extremely low. In a typical concern, you will many times finally end up OWING on the top of the year. in spite of the undeniable fact that, on the grounds which you document single, and stay on my own, meaning you additionally can document Head Of enjoyed ones, that's obtainable you will only get what they took out, minus a splash bit. some hundred dollars possibly. word too that your annual earnings is taken into consideration and we've no thought how a lot you're making.

Answer 5

I am a small business owner, and have made it my practice to set aside 20 percent of my gross earnings for tax purposes. I deposit the money on a monthly basis into an interest bearing savings account, and let the interest accrue. At tax time, there is always enough money to pay for the taxes without burdening our financial state of affairs.

Answer 6

You should get a earned imcome credit if that is your income and you have no investment income and you had expenses to offset some of that $6000 self-employment income. You should probably use a tax prep service to ensure you get back the refund you deserve.

Answer 7

The previous suggestion was for you to purchase the Turbo Tax software, I've found that simply filing on line as opposed to buying the software is actually better. I have tried both options.

Answer 8

I think you'll end up owing money, due to the extra non-taxed income. It sounds like a fairly simple return, so I would recommend trying to complete it yourself.

Answer 9

Go to walmart and buy TurboTax... $20 and it should answer those questions for you. Cheaper than a tax professional.