If i start a business and make under 19k do i have to pay taxes?

Question

If i decide to start a business and i only make 9,000 or less for the entire year, do i have to pay taxes? if so, how do i figure this? how much would i have to pay?

Answer 1

I will assume that you make $9,000 after you subtract all your expenses.  You would have to file a tax return and pay tax.

This return would require Schedule C and Schedule SE.  Schedule C figures your income and expenses from your business.  You can subtract your expenses as described in Schedule C linked below.

Schedule SE figures your Social Security and Medicare taxes on your net profit as computed on Schedule C.  These taxes come to about 15% of your net profit.  These taxes are paid with your income tax return.

You will also be subject to income tax on your net profit.  However, with $9,000 net profit you would owe little or no income tax, and likely would qualify for Earned Income Credit, which would reduce or eliminate the Social Security and Medicare taxes you owe.

Answer 2

If your net income from your business plus any other taxable income you have is under $8950 you won't owe federal income tax unless you are a dependent.  But if your income from your business is over $400 you'll owe self employment tax, for social security and medicare - that will come to around 14%..

Answer 3

Yes.  Business Tax, Social Security Tax, Medicare Tax, Personal Income Tax - State and Federal.  Better take some business courses before you start.

Answer 4

get an accountant or go to IRS website and download instructions for schedule C

Answer 5

You are required to file a tax return any time you have self-employment income of $400 or more (less is some cases).

Assuming that you make $9000 from your business (and this is your only income) and you are single with no dependents the following would apply.  The standard deduction and personal exemption should be $8850 for tax year 2008...with the deduction of 1/2 of the Self Employment (SE) tax you would not have a normal tax liability. However, the SE tax would be $1272.  

If you qualify for Earned Income Credit (you didn't mention your age) that would amount to about $273 (2007 figure).  So the net would be you owing somewhere around $1200. And if you haven't made quarterly payments there might be a late payment penalty too.

Hope this helps.

Answer 6

Under 19k or 9 k, you would have to pay taxes unless you could itemize deductions and bring your income under $3000 I think it is, and that's for all taxable income including another job. Many times you can show a loss when you itemize and plan well.

If you have another job and a business you can do pretty well on itemizing deductions.

Remember that self employment tax takes just over 15% off the top for self employment tax, which an employer would split with you if you had a job.

If you have children earned income credit can off set the self employment tax depending on how much profit you show and how many children up to 2 you have claimed.

You can find tax tables on irs.gov

edit: warning ... tkahrs has no clue and is spewing incorrect information ... people should not give advice on what they do not have knowledge of. Self employment tax encompases all the tax an employer usually shares including ss and all that, there is no "business tax" lol. If you don't understand your taxes a good accountant is the way to go. "Courses" are taught by idiots generally and are usually a waste of money, you can get books on your own and you don't need some can't deal with real life doofus prophessor messing with your head. You need good solid information from the real world.