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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10130
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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I own a small business and have just received payment for

Customer Question

I own a small business and have just received payment for service of 200K. I have liabilities from the work performed of 132K, what tax amount do I pay?
Submitted: 2 months ago.
Category: Tax
Expert:  Lane replied 2 months ago.

Hi. I can help here. My name's Lane

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If you are a single member LLC (which is taxed just as a sole proprietor) you'll use Schedule C to report the income AND the expenses. The net profit from that flows to line 12 of your 1040 (business income or loss) and it's added to your other income, if any, and then taxed at the rates that apply (depending on whether you file as single, or are a joint filer (diffrent rates and brackets)

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(but I want to be sure we're on the same page about expenses) You said "liabilities" which are amounts borrowed but not paid back yet (debt that carries a balance).

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But again if this is simply income minus expenses (costs) to do the job then you have net income of (200,000 - 132,000) = 68000

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and just as an example ... if you are single filer your taxes would look like this:

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Estimated Tax Analysis

Gross income$68,000

Qualified plan contributions-$0

Adjusted gross income=$68,000

Standard/Itemized deductions-$6,300

Personal exemptions-$4,050

Taxable income=$57,650

Tax liability before credits$10,184

Child tax credits-$0

Estimated tax liability=$10,184

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Finally, in addition to that, there will be the Self-employment tax (the way self-employed individuals pay social security and medicare tax) of 15.3%

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68000 X .153 = 10404 for a total FEDERAL tax of (10404 + 10,184) = 20,588

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Please let me know what questions you may have from here

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If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit") ... Otherwise I receive no compensation from JustAnswer for the work here.

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Thank you!

Lane

I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

Expert:  Lane replied 2 months ago.

Hi,

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I’m just checking back in to see how things are going.

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Did my answer help?

If this HAS helped, and you DON’T have other questions … I'd appreciate a positive rating (using the stars or faces on your screen, and then clicking “submit")

...

But again, let me know if you need more on this.

Lane

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