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re: Tax question as an independent contractor
Posted on 12/29/14 at 8:59 am to Lsujacket66
Posted on 12/29/14 at 8:59 am to Lsujacket66
quote:35% is not an unusually high amount of tax for a self-employed individual, especially one providing personal services. The 25% tax bracket starts at $73,800 for married filing joint. Combine that with approximately 15% self-employment taxes and state income taxes, and it is pretty easy to get to a 35% effective tax rate.
No way you should be paying 35% of your income.
quote:How does this reduce taxes? Expenses are deductible if they are ordinary and necessary. How do you justify the purchase of toys as being ordinary and necessary for business purposes as opposed to personal use? Can you substantiate the business use of your toys? Are you familiar with passive activity rules that would prevent the OP from deducting losses from real estate or other businesses?
Learn to buy shite. Whether you want that to be toys or investments in something like real estate or other business, never just willingly give the government that much money.
2
Posted on 12/29/14 at 10:47 am to Poodlebrain
quote:
35% is not an unusually high amount of tax for a self-employed individual, especially one providing personal services. The 25% tax bracket starts at $73,800 for married filing joint. Combine that with approximately 15% self-employment taxes and state income taxes, and it is pretty easy to get to a 35% effective tax rate.
i agree that's not unusually high for a high earning individual, but there are myriad ways to reduce this as an independent contractor. the OP needs a good accountant. if you know some other independent contractors, ask them who they use. a great person to ask would be someone in the oil business - those field workers are pretty clever with their tax situations.
Posted on 12/29/14 at 1:27 pm to Poodlebrain
quote:
quote:
No way you should be paying 35% of your income.
35% is not an unusually high amount of tax for a self-employed individual, especially one providing personal services. The 25% tax bracket starts at $73,800 for married filing joint. Combine that with approximately 15% self-employment taxes and state income taxes, and it is pretty easy to get to a 35% effective tax rate.
quote:
Learn to buy shite. Whether you want that to be toys or investments in something like real estate or other business, never just willingly give the government that much money.
How does this reduce taxes? Expenses are deductible if they are ordinary and necessary. How do you justify the purchase of toys as being ordinary and necessary for business purposes as opposed to personal use? Can you substantiate the business use of your toys? Are you familiar with passive activity rules that would prevent the OP from deducting losses from real estate or other businesses?
setting up a LLC and showing investment or loss, this could include a vehicle for company use, houses, land, tractors, etc.
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