Have a Tax Question? Ask a Tax Expert
Thanks for requesting me. How are you today?
To calculate your tax, I need to know your filing status - married or single
Okay let me do some calculations for you
The capital gains are long term, right?
yes, more than a year
For federal, I calculate your total tax to be $65,190
I used the TurboTax Taxcaster, available HERE
Let me check on the state now.
I would appreciate it if you can take me through the calculation process for federal..
I used the calculator. It would be extremely complex because you hit the alternative minimum tax
and I'm not good at doing those by hand.
Your effective tax rate is about 18% which you would expect because the bulk of your income is taxed at 15%
which income tax bracket would i fall under..?
Your marginal rate is 33%
I guess the 1099 is confusing matters for me....because a 1099 income means no tax has been withheld as it is from a consulting gig so what would be my actual income tax, if I removed the capital gains from the picture for a second?
You can't remove the capital gains. That changes your tax bracket.
Wait...I missed that..your tax will be a little bit more because you have self employment tax and I didn't put this in the right line
Add 7,771 to my figure for self employment taxes
okay...so are you able to give me the percentage split of taxes for my income from self-employment and my capital gains...?
You figure you pay 15% on $300,000, about 15% on your self employment just for self employment taxes, and then the rest is tax on your regular business and AMT
Delaware is $23,256.48
Do you own your own home, or have medical bills? We could bring this down some
if my self-employment income were to be reduced to <$36,250, does that mean I will have to pay 0% capital gains?
No, that would not be the case. Your capital gains income is factored in when you calculate your marginal rate
I am working on a contract job, so potentially could suspend the work temporarily which would take me down to a lower income bracket
so although it's taxed on 15%, the $300,000 still counts to get you to that 33% tax bracket
ok...no, i dont own my home or have medical bills..
i was hoping since I did not have an employer and was working contractually, I could push myself into a lower income bracket to avoid the heavy capital gains tax...but I guess that may not be possible.
No, it's not possible, unfortunately, given the level of your capital gains
It's sort of strange that they add that income when figuring your tax bracket, but then don't tax you that marginal rate
Your DE tax is $23,256 by the way
I'm sorry that I couldn't help in that respect
okay sure, thanks...are there any steps I can take before Dec 31, 2013 to reduce the capital gains?
no worries, I appreciate your help
capital gains tax, I mean
Well, you could invest in your business. If you drove your income negative that could help out
but you will spend more money doing that than you will save in taxes
Is there anything else that I could assist you with today?
that woudl be all
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