I am a business owner and would like to know what is a conservative amount that I should be saving for taxes ?

Question

Say the amount I made was about 32K ? Also am I able to write off exspenses as business expenses if I would of not purchased those items if I was not in that business?

Answer 1

Estimate your tax using Form 1040ES and figure in something for state taxes

Answer 2

If that's your only income, putting back around 1/3, or $11,000, should be plenty. This includes income tax for state and federal, and self-employment tax (social security and medicare).

The question of what is deductible is a little complicated - basically, you can deduct reasonable expenses of making the money. Items you wouldn't have purchased if you hadn't been in that business would usually qualify.

For some large expenses, you'd need to depreciate them (spread the cost out over several years) rather than deduct the entire cost in the year you made the purchase.

Answer 3

Amount you made of 32k is not clear as to whether it is gross or net. If you gross 32k and have expenses of 8k then your net would be 24 k. On this you would owe FICA by figuring thusly; 24,000 x .9235=22,164x .153 equals $ 3,391.00 in FICA tax. If this is your only income and you are married filing jointly you would figure thusly; for 2007 24,000 minus 1/2 of FICA in amount of 1,696 = 22,304 minus standard deduction of 10,400=11,904 minus 2 exemptions of 3,350 (6,700) = 5204 taxable; for a federal income tax of 523.00. Your total for the federal side would thereby be $ 3,914.00. Your state tax can be figured from the federal figures you already have. If you have children then you will also have CTC (child tax credit) of up to 1,000 per child depending on age; and EIC. See how simple taxes are?