Calculating sole-proprietorship tax?

Question

Hello there,

I have sole-proprietorship and have a few questions. My first month gross income was $1800. Out of that number I had $524.01 in expenses. Which left me with $1275.90. So my questions are;

1.) What is my SE tax for that amount?

2.) What is my income tax for that amount?

Thank you!

Answer 1

SE Tax should be 15.3% of $1275.90.

Total tax? More information is needed. Total wages, filing status (single, married), dependents, do you itemize deductions (mortgage interest, property taxes). I think irs.gov can do a calculation for you. If you didn't make much, it's probably 10% of total income (first bracket).

Answer 2

Around $180 for se tax.  For income tax, it depends on too many things you don't mention to even make a good guess.  If you expect to make about that same amount all year, for 12 months, and have no other income, your federal tax would be somewhere between zero and $1100 for the year, or between zero and $92 per month - state and local income tax would depend on where you live.

Answer 3

First, you have to determine which expenses you are allowed to deduct.  There are some expenses that you are not allowed to deduct.  After determining income minus expenses that you are allowed to deduct:

1. Multiply that differnce by .9235 and multiply the result by 15.3%.  The final result is your SE tax.

2. Take the total of all your other income, plus self employment income minus expenses that you are allowed to deduct.  Subtract 1/2 of the SE tax.  Also subtract any other "adjustments" (such as IRA contributions).  The result is your adjusted gross income.  Subtract your other deductions and exemptions.  Not that the exemptions for yourself, dependents, and your spouse (if applicable) are per year, so divide by 12 if you are doing this for a single month.  The result is your taxable income.  Multiply by 12.  The result in your taxable income per year.  Look in the table in the instructions for Form 1040-ES (on http://www.irs.gov) to find the corresponding income tax per year.  Divide by 12 to find the corresponding income tax per month.