im 24 years old, lives in new york city, just graduated from college...and found myself a job in a real estate company with a position of assistant manager. And im gonna file my tax as independent ( used to be dependent uder 24), the question is, they told me that the tax cut of my pay check would be 30%, is that true ? I remember the tax cut was around 17% when i was working in other company before. I mean, my salary is very low, almost touching the lowest labor salary rate, and this would never change before the 3 months probation period. I just want to ask, is it serious that i have to pay 30% tax ? and forgot to mention that my salary now is around 20k/year for entry level. What can i do to reduce the tax rate ? please give me details, thanks alot !
I used the calculator at http://www.paycheckcity.com/ to see what your withholding should be. If you prepared your W-2 saying that you are single and have 1 exemption, your bi-weekly paycheck would look like this:
Bi-weekly Gross Pay $769.23
Federal Withholding $46.71
Social Security $47.69
Medicare $11.15
New York $19.57
NY SDI $1.20
City Tax $12.90
Net Pay $630.01
630.01/769.23 = ~81.9%, which means that about 18.1% of your earnings is going toward taxes.
If you are paid on a different schedule (twice a month, weekly, etc.) the percentages may change slightly, but not by two-thirds (18 + (2/3 * 18) = 30.)
I hope this helps.
Gary
By the way, Independent is not really a tax phrase.
For 2009, if you graduated in May and *did* support yourself, you are not a dependent.
This means, you owe tax like any other adult.
7.65% for fica/mc.
PLUS federal income tax.
PLUS state income tax.
PLUS city income tax.
The first $9350 of income is not taxed by the IRS.
As for $20K, try www.paycheckcity.com and put in 2 allowances.
as an independent contractor, you will receive a 1099 for your income from anyone you worked for
you will file a Sch C on your gross income and show any expenses you can claim to adjust that total
you will file your Sch SE on the net of your Sch C income and that will be apprx. 15.3% of your 'net'
that will be added to any other income you have on your 1040, and you will be allowed to use as a credit half of your SE tax to adjust to your AGI
then you have your personal exemptions, standard deduction, or itemized and figure your income tax
you will bring your figure from the SE to the 1040 and that possibly may be the only tax you will be required to pay
you could possibly have EIC which will reduce that amount but all these 2008 forms are on www.irs.gov(2009's are not yet available)