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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1237
Experience:  US Taxation specialist.
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How can i find out how much federal and state tax is being

Customer Question

How can i find out how much federal and state tax is being withheld or cut from my spouse's monthly pay check so that i can ascertain how much extra federal & state taxes amount is being deducted from my spouse pay check and that excess overpaid or withheld taxes by my spouse's employer company , i can consider that overpayment as the payment of estimated taxes on my only one income from online spot forex trading and thus i dont need to make any payment of estimated taxes for my own in 4 instalments to federal and state .

FYI : My spouse gets a detailed salary slip every month with the deductions break-up like Federal Income Tax , Social Security Tax , Medicare Tax , MN State Income Tax , Med125 , etc.
Submitted: 5 years ago.
Category: Tax
Expert:  USTaxAdvising replied 5 years ago.

USTaxAdvising :

You can find out how much is being withheld from her check by looking at the detail on her stub. FWT would be federal withholding. But I don't think this is necessarily the information that will assist you indetermining if you are going to be "underpaid" for the year and thus have to make estimated tax payments.

USTaxAdvising :

You need to compute your "estimated" taxable income every quarter. When doing so you project how much you will earn together as MFJ and how much tax you will have to pay.

USTaxAdvising :

Then you factor in how much tax you have paid in by withholding.

USTaxAdvising :

The IRS has a nice "estimate" online service that you can use. Check it out here: http://www.irs.gov/individuals/page/0,,id=14806,00.html

USTaxAdvising :

So if you compute your estimated taxable income at the end of every quarter and it turns up that you have had enough withheld you are okay for that quarter. If in the following quarter you make a bunch of money in FX trading and it turns out that you would not have to pay, you would pay in taxes on the income generated during the quarter. (ie self employment tax at 13.3% and Federal and State at the applicable tax table rates)

USTaxAdvising :

I would think this is a great deal of work and would advise to simply pay in 110% of the prior year liability, but you could in essence be giving Uncle Sam a short term loan, interest free.

USTaxAdvising :

I hope this helps, let me know if you have any further questions.

Customer:

self employment tax you mentioned above , am i need to pay self-employment tax as i do only spot or cash forex trading ?

Customer:

Is it ok that i dont make payment of estimated taxes for Ist quarter on 15th April considering my tax liability less than $1000 or over taxes withheld or cut from my spouse's pay check and then i make payment of estimated taxes for 2nd quarter or 3rd quarter as on 15th June or 15Oct. only ?


We need to pay estimated taxes in current year in that specific quarter in which our tax liability comes to be $1000 or more . Is this tax liability limit of $1000 is applicable for Federal as well as for State retun separately ?

Customer:

Do i dont need to pay any Social Security Tax , Medicare Tax & Med125 as i see that these are being deducted from my spouse's pay check monthly ?

USTaxAdvising :

self employment tax you mentioned above , am i need to pay self-employment tax as i do only spot or cash forex trading ? - that's right you are not subject to SE tax.


USTaxAdvising :

Is it ok that i dont make payment of estimated taxes for Ist quarter on 15th April considering my tax liability less than $1000 or over taxes withheld or cut from my spouse's pay check and then i make payment of estimated taxes for 2nd quarter or 3rd quarter as on 15th June or 15Oct. only ? - yes it is okay. If it turns out that there is a penalty for underpayment you can prepare and file Form 2210 to show that you were not liable for taxes on your FX income for such specific quarter and then when you earned more income in other quarters you would be subject to more tax. see link here http://www.irs.gov/pub/irs-pdf/f2210.pdf

USTaxAdvising :

We need to pay estimated taxes in current year in that specific quarter in which our tax liability comes to be $1000 or more . Is this tax liability limit of $1000 is applicable for Federal as well as for State retun separately ? - it is applicable to Federal and the states will generally follow this methodology as well.

USTaxAdvising :

Do i dont need to pay any Social Security Tax , Medicare Tax & Med125 as i see that these are being deducted from my spouse's pay check monthly ? - No you do not pay into these taxes, these are employment related taxes and you do not fall under these as an investor in FX trading.


Customer:

May i know why am i not subject to self employment tax or who is liable for it ?

Customer:

as i understand , an earning person has to pay around average 25% federal tax , then average 7% state tax , then social security tax + medicare tax + med125 , etc. around 10% all . Thus , around 42% goes in taxes on earned income , ............ am i thinking right ?

USTaxAdvising :

May i know why am i not subject to self employment tax or who is liable for it ? - self employment tax is for those engaged in a trade or business. As an investor in FX securities you are not subject to SE tax.

USTaxAdvising :

Your understanding is correct but not the part of medicare etc and how it is all factored together. If you are employed your employer pays 50% of employment taxes which are around 6.5%. As Self employed you pay 13%. Effectively the tax rate is 25% federal including the employment taxes.

Customer:

ok , so will i need to pay self employment tax if i file my taxes in the status of Forex Trader and not as investor in fx ?

USTaxAdvising :

No that's the great thing as a trader - you are not subject to self employment taxes. This is the only profession that is not subject to SE tax.

Customer:

ok , so you mean FX Trader whether in the status of investor or trader and whether in spot fx trading or future fx trading or options fx trading , is never subject to self employment tax ................. , am i right ?

Expert:  USTaxAdvising replied 5 years ago.
ok , so you mean FX Trader whether in the status of investor or trader and whether in spot fx trading or future fx trading or options fx trading , is never subject to self employment tax ................. , am i right ? - correct.
USTaxAdvising and other Tax Specialists are ready to help you
Customer: replied 5 years ago.

What are the tax reliefs available to me if i buy a house first time in USA ?

 

FYI : I am an Indian Citizen having US Green Card . I have my own house in India . Here , in USA , i live in rented apartment so far from the year 2005 .

Expert:  USTaxAdvising replied 5 years ago.

This is a new question. Please repost this as a new question and I will be right with you.

 

Thanks!

Expert:  USTaxAdvising replied 5 years ago.

This is a new question. Please repost this as a new question and I will be right with you.

 

Thanks!