As a 1099 contractor I have to pay federal income tax plus the self employment tax. I want to be more proficient in understanding how this all works. If there's an online resource you know of that would be helpful please let me know where that is.
I will file as married filing jointly. Let's throw some numbers into the mix just for the sake of discussion: Let's say my AGI is $30,000.
For income taxes, it's 10% of the first $18150 so the tax on this is $1815
Then $30,000-$18150 is $11850 and that amount is taxed at 15% which means I owe an additional $1778, rounding up to the nearest dollar.
So far we have $1815 plus $1778 equals $3593 in taxes that I owe, before adding the self-employment tax.
Then we have to add a total of 15.3% tax for self-employment taxes. This is where I start to get lost because according to calcxml.com self employment calculator, they subtract a 'self-employment adjustment' from the AGI before calculating 15.3% of the income--I do not know what the self-employment adjustment is.
Then when the self-employment tax is calculated, there's a tax deductible portion that is reported on form 1040.
Without considering a definite AGI, let's say the total taxes I owe between income tax and self employment tax equals the sum of $5000. Does that mean that if $2000 is the tax deductible portion of my self employment taxes, that my final tax bill would be $3000? Thanks...
