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New to 1099 work, trying to figure out taxes

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  • New to 1099 work, trying to figure out taxes

    Hi

    So I'll be starting to do some 1099 work on the side this fall.  Just wondering how to figure out the taxes, so I know how much to set aside but also how much I'm really gaining from this.

    I'll have W2 income as well.   Biggest issue I have is out to handle the self employment tax wth my W2 income.  Do I just withhold 6.2% for the employer Social Security, 2.9% for medicare and 0.9% for everything above 200k?

    Example I made up:
    1099 income of $80,000

    Business deductions of $8000

    SEP IRA contribution of 14,400 (20%)

    Self Empl Tax (9% instead of 15.3%) of 5984.28 (calculated the 1099k income minus deductions)

    Taxable income of $54607.86 (80k - 8k - 14.4k - 5984 ?)

    Fed income tax ( still confused on this ...do I just put in what tax bracket I'll think I'll be at? -- I assumed a marginal tax rate of 27% -- 14,744.12

    state income tax of 3139 (5.75%)

    so take home would be around $36,723.79 for the year?

     

    Thanks

     

     

     

  • #2

    1. Set up a SOLO-k, not a SEP, so you can still make backdoor Roth IRA conversions.

    2. You're trying too hard to get this down to dollars and cents. Just set aside 40% of your net profits if you are an attending, 1/3 if you are still in training. Tweak a little if you will also owe state income taxes.

    3. How to figure taxes for a side business post on my blog

    Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Thanks.  So 33% plus the added state income tax.  So around 40%.

       

       

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      • #4




        Thanks.  So 33% plus the added state income tax.  So around 40%.
        Click to expand...


        That should get you there.
        Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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