Tax Question

[homer]

Hypothetical:

 

Is it possible to have $12,500 in taxable income (income after deductions for part time job and self employment) yet still owe $3500 to the feds in taxes?

 

My pea brain thinks that seems really high. What am I missing?

[jjkoestler]

Yes. You get killed on self-employment taxes.

[homer]

OK that sucks. This is the first year I'm filing as a self employed person. Sticker shock to say the least.

 

How can I avoid that going forward?

 

EDIT: http://blog.turbotax.intuit.com/2010/06/14/6-ways-to-pay-as-little-self-employment-tax-as-legally-necessary/

 

Wish I knew this last year. I would have done it sooner.

[Roderick]

Hypothetical:

 

Is it possible to have $12,500 in taxable income (income after deductions for part time job and self employment) yet still owe $3500 to the feds in taxes?

 

My pea brain thinks that seems really high. What am I missing?

 

Besides the income tax you are paying the 7.65% of FICA for yourself (employee) and the 7.65% of FICA as the employer. So 15.30% of your tax bill is FICA, not income tax related.