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Get your taxes done using TurboTax
Yes, let's break this down to where it's a little more digestible. Let's take each part one at a time.
- Judging from what is written., you have a Housing Allowance reported in box 14 of your W2.
- Housing Allowance isn't taxable income. However, it's subject to self-employment taxes,
- Now your taxable income, excluding your housing allowance, is $41,136 and the tax is $4357. This is correct.
- It sounds like your self-employment tax is based from a $103,772 housing allowance because of the following formula to determine self-employment tax. This is ($103,772)(.153)(.9235)=$14,663. Just think what would happen if you had to pay income tax on that amount.
When you talk about tax brackets, income tax brackets and self-employment taxes are two different things, and they are not grouped in the same way.
Reach out if you have additional questions. I just wanted to break this down to where it may be more understandable because some tax issues are confusing at best. In the meantime, just march forward and continue the good fight as our lord commands us to and continue your good work.
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March 6, 2025
9:01 AM