How much is your self-employment tax?

Self-employment tax can eat up a huge chunk of your income (up to 13.3%).  Here is how to calculate self-employment tax for a self-employed individual operating as a sole proprietorship. The two components of self-employment tax are social security tax and medicare tax: In 2012, Social security tax is 10.4% of the first $106,800 in […]
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Deducting interest on your home mortgage

John Brown’s Farmhouse by Tony the Misfit, on Flickr Interest on your home mortgage is deductible from your taxes if you file Schedule A (i.e. you itemize deductions).  The mortgage must be secured by your home or your second home. Mortgage interest paid to individuals (such as a relative) are also tax deductible. Home equity […]
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Why a $10,000 gig might not yield you so much

If you are self-employed,* then your income will be subject to two forms of federal taxes (not to mention state and local taxes): federal income tax and self-employment tax. Federal income tax Federal income tax is assessed at the rate on your income tax return.  This varies based on your family income. In the US, […]
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How much TurboTax actually cost me: $22.27 above budget

As I wrote before, I was planning to use TurboTax to prepare my taxes.  I’m quite cynical about all of the extra charges that Intuit hits you with and figured that it would cost me $73.97. I wound up using TurboTax for the iPad.  Federal filing (including e-filing) cost $49.95.  State filing (including e-filing) cost $39.99. […]
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Your tax fantasy

Imagine an IRS rule that allows you to immediately deduct the cost of almost any asset you need, regardless of the asset’s useful life. Computers?  Deductible.   Furniture? Deductible. Software?  Deductible.   Section 179 allows you to buy assets and deduct them immediately on your tax return this year. Now, be forewarned that the IRS set limits […]
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Don’t leave your money on the IRS’ table

Not everyone has to file a tax return.  But you might want to file anyway.  Here’s why. First of all, you can check here to see if you are required to file.  Even if you are not required to file, you may wish to file your tax return anyway in order to get the tax refund that you are […]
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