Tax Rate

[ckwildfire]

TurboTax is calculating my tax rate at 41.5%! Is this right? My total income was $58,000 and taxable income is $32,000. I'm self-employed so I would have to pay the self-employment tax as well, I believe. But how does it get up to 41.5%? 

[ThomasM125]

Your net income would be in the marginal 12% bracket. Your self-employment tax would be about 15% of your self-employment income, so you could get to 41.5% based on those number alone if you compare your tax to your taxable income.

[Rick19744]

Keep in mind that you are paying two (technically three) different types of taxes here being self-employed:

• The $32,000 in taxable income taxed at approximately 12% is federal income tax
• While the facts don't provide sufficient detail on exactly what your SE taxable income is, this tax is for two types of tax:
  • Social Security tax is 12.4%
  • Medicare tax is 2.9%
  • Combined 15.3% SE tax