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emc011075, Tax adviser
Category: Tax
Satisfied Customers: 2930
Experience:  IRS licensed Enrolled Agent and tax instructor
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I just filled a tax extension because my accountant

Customer Question

Hello, I just filled a tax extension because my accountant told me I need to pay close to 45% of my income. My wife and I made 230,000 this past year and so far have paid 12,000 dollars to the IRS. This is the first year we have made this much money.
Submitted: 1 year ago.
Category: Tax
Expert:  emc011075 replied 1 year ago.
Hi. My name is ***** ***** I will be happy to help youWhat's your question?
Customer: replied 1 year ago.
Is this accountant right? 45% of our income seems crazy
Expert:  emc011075 replied 1 year ago.
Well, it depends what type of income you had. If it is self employment income (1099Misc) than it wouldn't be so unusual in 28% tax bracket. Also, the question is, is it just your federal taxes or it also includes your state taxes?
Expert:  emc011075 replied 1 year ago.
Can you give me breakdown of your income and your filing status?
Customer: replied 1 year ago.
We both work for a Home health company on a 1099. It is both State and Federal Tax that we owe. Any suggestions?
Expert:  emc011075 replied 1 year ago.
Give me couple of minutes. I will a quick estimate.
Customer: replied 1 year ago.
just federal. made 350k filing married joint with three dependants and both filing in colllege
Customer: replied 1 year ago.
made 250k after deductions probably 200k
Expert:  emc011075 replied 1 year ago.
How much did you made minus your business expenses?
Customer: replied 1 year ago.
around 200k
Expert:  emc011075 replied 1 year ago.
Before you said you made 350K, than you said 250K, after deductions, 200K. I am assuming you mean business expenses not some other deductions.
Customer: replied 1 year ago.
I typed wrong 250k and after business expenses about 200k. I was told I have to pay 30% taxes to federal along with 15% self-employment taxes
Expert:  emc011075 replied 1 year ago.
I am coming up with 54K to IRS and 8K to NM. Your effective tax bracket is 31%, plus there's 15.3% for self employment tax. This will get you close to 46%.
Expert:  emc011075 replied 1 year ago.
It is a combination of your tax bracket and type of income. Also once you hit 150K of joint income, many of your credits, including all your education credits goes away and your deductions will become limited. You also should sit down with your preparer and go over your expenses. What you may think it is an expenses, it may not be currently fully deductible. Some things has to be depreciated (deducted over several years), for certain deductions, like meals you are only allowed to take 50%.