Could a CPA help me?

1099 is with zero withholding usually. So that's a $17k swing unless you are in the new 56% tax bracket I doubt that's right.

Do you have a lot of expenses and or depreciations for your 1099 work?

For $30k in 1099 work I'd likely see a Cpa, it's gonna cost you $800 or so though maybe more. Would likely be worth it.

The self-employment tax got you it sounds like. You have to pay the employer's and the employee's payroll tax (FICA, Medicare, Medicaid) when you're self-employed in addition to income taxes on your SE income.

The SE tax comes to about 15% but you get half of it as a deduction as I recall.

It still sounds like an unexplainable jump for $30k in income to increase taxes $17k.

Have you set up a SEP/IRA? It's a way to set aside a chunk of cash and still deduct it from your taxable income.

TurboTax asks you if you want to contribute to a SEP/IRA.

quote:

---

Really not to far off if that income is in the 33% bracket.

---

He'd have to be in the 39% marginal bracket before his 1099 income is included for it to add up.

quote:

---

Gross was 140k before the 1099 work.

2 kids, daycare, max FSA, mortgage interest, student loan interest, etc.

We stashed away enough to cover it but I was not expecting a 17k swing. I'll gladly pay a CPA if they can get that down to an easier to stomach number.

---

That's definitely not correct then. CPA shouldn't be too bad as it seems like your return isn't all that complicated. I would recommend going to one as it should cost less than a thousand and itll save you probably 5k minimum.

One thing is phasing out of child care credits - which are dollar for dollar - of $50 for every thousand over $120,000. So another $1,500 got lost bc of the 1099 income.

Then you lost your student loan interest deduction all together (over 160k).

Then you paid 15.3% SE tax. ($4590)

Then you pay ordinary income of 28% on most of it... ($3250+$4760=$8,010)



Wow. Yeah, get you a CPA and see if they'll sign off on you doing a SEP IRA before October.

Yep. And...

#taxationistheft

You need to see a CPA not just for 2017, but for your 2018 and beyond planning. As said a lot of stuff phases out.

The 12.3% for personal income for social security and Medicaid in addition to your tax brackets gets you too.

Contributing your 1099 income to something like a SEP IRA (simple employment pension) will allow you to contribute any money with a 40%+ tax break immediately. It will also lower your AGI so you may be able to not hit one or two of those benchmarks.

quote:

---

ontributing your 1099 income to something like a SEP IRA (simple employment pension) will allow you to contribute any money with a 40%+ tax break immediately. It will also lower your AGI so you may be able to not hit one or two of those benchmarks.

---

While a SEP certainly is worthy of consideration here, it won't reduce his S/E tax, only his regular tax. so his break will be basically his marginal rate, which still ain't bad but it's not 40+%

He's also in the range where AMT might be an issue. OP, do you know if you are now showing AMT on Page 2 of your 1040?

quote:

---

it won't reduce his S/E tax

---

It absolutely will. SEP contributions are an expense of the company, not a deferral by an employee. If he contributes 6k, that'll drop his net income to 24k from 30. Just as if he spent 6k on a computer program he had to use for work.

The question is can he do it with the rest of the information we don't know?