Hello. I have a question about taxation of pay. My husband is an actor, when he signs a contract to do a project, it states rate of pay for the day and that residuals are to be paid to him (whatever the stipulations may be). Why are his residuals taxed soooo high? It's about 47%! It's taxed like a bonus, but it's actually part of his pay, so why does the government do that? Are they just trying to take more taxes from the more highly paid actors and raping the little guy in the process? Cause that's how it feels.
2007-02-03 14:25:48 · 2 answers · asked by Chellebelle78 4 in Business & Finance ➔ Taxes ➔ United States
No, not 1099's. He gets W-2's at the end of the year.
2007-02-03 14:31:41 · update #1
The government doesn't do this. You're seeing that high rate on his withholding, not on his actual taxes. When you actually file the return claiming that income, then it will be taxed as ordinary income for the year. Bonuses work the same way. But assuming that it's considered self-employment income, he'll have to pay the 15.3% self-employment tax in addition to income taxes.
If too much was withheld, it will be refunded to him.
2007-02-03 14:31:24 · answer #1 · answered by Judy 7 · 0⤊ 1⤋
They're paid via 1099, right? Self-employment tax at 15.3% plus income tax of around 28 - 30%.
2007-02-03 22:30:31 · answer #2 · answered by Bostonian In MO 7 · 0⤊ 1⤋