GeoffM

I'm trying to work out whether I've saved enough tax this year . I've followed this link though I get a bit lost at the later stages when it mentions deducting your income figure - gross or net? Anyway, the very approximate figure I come up with is 31%. Is that ballpark roughly what anybody else pays - married, single income in the high 10ks, couple of kids, big medical premiums?

I've got an accountant; just want an idea of the upper end figure I should have been aiming for, before I send it off: any less and it goes into savings. Or shopping.

Thanks.

Pulaski

That sounds high to me, though I am not familiar with the self-employment tax. Given the tiered tax rates,allowances and deductions, I'd expect a single income family to be paying around 20% in income taxes, and that 25% would be generous enough to surely cover your tax liability.

Pulaski

I just tried calcxml.com and it is showing for a married couple with $90k income in 2012, filing jointly with 2 children, standard deductions and allowances only and no retirement or college savings would pay about $7,700. In your case you'd have to add the self-employment tax. In most states there will also be state income tax.

Steve_

Well in the US you have to pay both halves of FICA. I noticed on The Daily Show the other day that even Jon Stewart was taking the piss out of this situation, you're not a busboy, you're Busboy LLC. So you're paying 15.3% instead of 7.65% up to the social security contribution limit (yes you get the SE deduction but that's basically to level the playing field with a regular employed person, but you're still paying both halves of FICA).

Obviously that's a big chunk of money.

Whereas in Canada it's 4.95% and the contribution limit is only up to $50,100 (exempting the first $3,500), so you pay 9.9% up to that limit if you're self-employed which is peanuts by comparison. (As opposed to the $110,100 social security contribution limit).

One of the reasons I live in Canada.

Say you earn $110,100, in the US you're paying $13,652.40 in payroll taxes, in Canada (as a self-employed person exempt from EI) you're paying $4,613.40. A savings of $9,039 (assuming one for one exchange rate, which it is at the moment).

Which is something you should remember if anyone ever tells you Canada has higher income taxes. Yes we do, but we get healthcare coverage as well and payroll taxes are way lower.

On the flip side, you don't get much from the govt. when you reach retirement age.

GeoffM

Thanks, Pulaski, that's a bit more comfortable.

Steve, well, I live in the other CA and you can't put a price on family nearby! Thanks though.

Pulaski

OK, so you'll need to add around $12k for payroll taxes, ...... which will bring you right back to the 20% that I originally suggested!