Taxes Made Simple

Samantha (independent contractor) asks:

I work as an independent contractor. I'm single with no kids. I'm going to make about $40,000 this year. How much should I save for taxes? 

Answer:

Samantha-

Well, it's hard to make any sort of accurate estimate with no information as to your business deductions. That said, I'll do the best I can. :-)

Given the assumption of no business deductions:

• Your self-employment tax will be $6,120 (15.3% x $40,000)
• Your regular Federal income tax will be $4,296.26

Now, that gives you a grand total liability of $10,416.26. But that doesn't take into account business deductions or state income taxes. More importantly, you should be aware that you should probably be making estimated tax payments throughout the year. If you wait until the end of the year, you're likely to be charged a penalty for underpayment.

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