1- For individual contractors or self-employed individuals, is the tax bracket for gross income on Form 1040 determined based on yearly income or monthly salary?
2- Where can I access federal income tax calculators and Massachusetts tax calculators for consultants? I have low business expenses how will that impact the overall federal and state tax I will owe at the end of year 2024?
3- My estimated gross income before taxes and deductions is around 130,300 for 7 months under my current contract. Is this the correct amount to use to determine my tax bracket ?
4- On my schedule C how do I calculate my miles ?
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1- For individual contractors or self-employed individuals, is the tax bracket for gross income on Form 1040 determined based on yearly income or monthly salary? It is determined by the adjusted gross income from all sources for the whole year. However, to clarify further, if you are a sole proprietor or single member LLC, you are not allowed to take a monthly salary. The money you take out of the business is called distributions, and it is not subject to taxes, but you can't take as a deduction. For example, if you pay yourself $40k and you made $100k in gross profit, you will be paying taxes for the $100k because you can't take that $40k as a business deduction.
2- Where can I access federal income tax calculators and Massachusetts tax calculators for consultants? I have low business expenses how will that impact the overall federal and state tax I will owe at the end of year 2024? You can find the Self-Employed tax calculator here for federal tax liability calculation. For Massachusetts, the income tax rate is a flat 5%.
3- My estimated gross income before taxes and deductions is around 130,300 for 7 months under my current contract. Is this the correct amount to use to determine my tax bracket ? You pay taxes over the net profit, not the gross. To determine your tax bracket, you have to calculate your gross income, minus your business expenses. Similar to the example above, let's say you made $100k and have $40k in qualified business expenses. You will pay taxes for the $60k, not the $100k.
4- On my schedule C how do I calculate my miles ? For 2024 the standard mileage rate will be 67 cents per mile. Please remember to keep a log of your mileage. You can use an app or track them manually.
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