Please tell me if I am calculating what I will owe in self employment taxes correctly. I work as a secretary.?

Question

I work for a real estate agent, and receive $8 dollars and hour, for forty hours a week. She said she will give me a 10-99 at the end of the year. I hope to be gone long before then.

I am holding back roughly 15% of my income. I came up with this calculation by an article on a website that had a formula. I will cut and paste the formula. Please tell me if this is correct because I don't want to owe a tremendous amount of taxes at the end of the year. The state I live in does not have a state tax.

Also, am I eligible to claim the mileage of driving to and from work. I don't go anywhere once at work though.

Or will I just pay 15% or more without having any deductions?

I am married and my husband is not working. We don't have any children. I don't want to sound stupid, but I want ot make sure I have all the taxes covered. Am I forgetting to pay federal? Or is the 15% I pull back each week from my pay only going for medicare?

Almost forgot!!! Here is the formula I used.
Instructions
STEP 1: Figure out your net income from self-employment. Net income is typically your total business receipts minus your total business deductions. STEP 2: Multiply your net income from self-employment by 0.9235 (or 92.35 percent). Your answer is called your "net earnings" from self-employment. If this number is less than $400, you don't have to pay self-employment tax. STEP 3: Multiply the amount of your net earnings that is $76,200 or less by 0.153 (or 15.3 percent), and multiply any net earnings over $76,200 by 0.029 (or 2.9 percent). Add your two answers together. This is your self-employment tax. STEP 4: Report your self-employment tax on Schedule SE of the 1040. Tips & Warnings
You can deduct half of your self-employment tax in determining your adjusted gross income. Do this in the Adjustments section of the 1040.

Answer 1

15% is about right for self-employment taxes, which are the equivalent of both employer and employee portions of Social Security and Medicare taxes. Federal income tax is in addition to that amount.

The most important issue is "Are you truly self employed?" There are specific rules that determine who is an employee and who is not. Based on working 40 hours a week for a set hourly rate, I am certain you should be classified as an employee. In that case, your employer is required to withhold taxes, pay the employer half of Social Security and Medicare taxes, and issue a W-2, not an 1099.

Commuting to and from work is never deductible.

Edit: I just did the math and the other answers are correct about regular income tax. If you have no other income, you should have not regular income tax liability.

Answer 2

You're about right in calculating the self-employment tax, and if neither you nor your husband have much other income, you shouldn't owe any income taxes, so that should cover you.

A bigger question is whether you're actually functioning as an independent contractor or not. From your description of your job, you would be an employee, not an independent contractor. The employer doesn't just get to decide which you are. There are rules to determine this, and it sure sounds like you're an employee. The difference to you is that as an employee, the employer would be paying half of that 15.3%, you'd only pay half of it.

If the real estate office is your main place of work, you can't deduct the mileage traveling from home to the office.

Answer 3

First of all your employer is ripping you off by paying you as self employed. A secretary is not self employed and should be being treated as an employee. They should be taking taxes out of your check as well as paying social security, workmans comp etc. But, there is not anything you can do about that.
You will owe self employment tax as well as income tax on your total income. Driving to and from work is called commuting, and is not deductible. You can only deduct miles that you drive on the job, for your employer.
I don't know what you mean by holding back 15% of your income. You should not hold it back, you should pay it in estimated taxes to the govt. You owe your first payment 4/15, second 6/15, third on 9/15 and the last on 1/15/08/
Remember that you owe income tax on the income as well as self employment tax. For income tax you can subtract your standard deduction, (married is 10,000) plus an exemption for both you and your husband, currently 3,300 ea. Only after $16,600 will you pay income tax, but you will pay self employment tax on all of your income.

Answer 4

The 15.3% is only the portion for social security and medicare. You may also need to pay federal tax on your income. The amount of tax depends on how much you will be making.

If youre filing jointly for 2007, you would get a standard deduction of $10,700 and $3,400 each personal exemption. So any income in excess of $17,500 will be taxable. If you do not plan on earning that much in 2007, you will not owe any federal tax.

The mileage used commuting to and from work is not deductible.

Answer 5

OK - Eight dollars per hour times forty Hours = $ 320.00. Net Self-Employment tax is 12.6% times $ 320.00 = $ 40.32. Sounds like you are in the lowest tax bracket which is 15% times $ 320.00 = $ 48.00.

$ 40.32 plus $ 48.00 = $ 88.32

Net Marginal Tax Savings for a Single Person
(Standard Deduction & Zero Bracket Amount
$ 8,450 x 15% = $1,268/52 weeks = ( 24.38)

= 63.94
Divided by $ 320.00 = 19.98% or 20%

In your situation you will be underpaid at the end of the year by 5% of the amount of your earnings.

Mileage to/from work is non-deductible.

Answer 6

you utilize your internet self-employment earnings to determine the self-employment tax. The formulation is 15.3% of ninety two.35% of the internet income below $113,seven hundred and 2.9% of ninety two.35% of the surplus over $113,seven hundred. then you definately subtract 0.5 of the self-employment tax from the internet self-employment earnings to calculate your AGI (the employer proportion of payroll taxes are deducted as a employer cost and this is the way you %. yours up whilst self-employed) and then subtract your individual exemption and familiar deduction to get taxable earnings. Your earnings tax relies upon your taxable earnings.

Answer 7

i remember the old days making 8.40/hr.....i don't think i can ever do anything less than 60/hr now...oh sorry...yeah so about your tax. you can claim your mileage on your tax and gas money too. You lost me with the self-employment.