I am an Oklahoma resident that occasionally traveled to Kansas City for work at a job based out of California.
What kind of tax rates should I be expecting?
Turbo Tax placed my blended tax rate at 45%!
The total income earned was under $20,000
The employer lives in Missouri currently and is "Doing Business As" out of California.
https://www.kiplinger.com/taxes/tax-brackets/602222/income-tax-brackets
shows a tax rate of 12% for taxable income between $9,951 to $40,525
Question 1: A blended tax rate of 45% is outlandish, how can I verify this is correct?
Question 2: Must I file a California state return even though zero dollars were earned physically in the state? ( I never traveled or spent time in California)
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Did you have income other than the $20,000 you mentioned?
The tax rate you reported is for Federal Taxes.
Since you are self employed, you also need to pay FICA (self-employment) tax which is approximately 15%.
That is for your Federal Taxes.
State taxes:
If you are reporting that you earned all $20,000 in each state, then it is likely that you are overstating your earnings in each state. Usually a state only taxes what is earned in that state, and provides a deduction or exemption or credit for taxes paid to a different state.
I am not familiar with the states you mentioned so I can not address them specifically.
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Thank you for the response!
The total earned income was for Oklahoma since I never changed my physical residence address.
I would travel to KC, MO once a month for office staff meetings.
I just find it odd that the blended tax rate is as high as 45%-61%, TurboTax provides no explanation for it.
Unless you have significantly more income than the $20,000 you mentioned, I also find a tax rate of 45%-61% high.
You mentioned "Blended tax rate".
I have not seen that term before. How are you calculating it or where are you seeing it - how is it calculated?
To ensure you have not made a gross error, I suggest the following:
For federal, take you total taxes (Form 1040, line 24) and divide it by your taxable income (Form 1040, line 15) . This would give you an average tax rate for your federal taxes.
Form 1040 is available here: https://www.irs.gov/pub/irs-pdf/f1040.pdf
Then do the same for each state and see if each of those rates make sense to you.
The following site gives you a point of reference for what reasonable rates look like, by state
https://www.nerdwallet.com/article/taxes/state-income-tax-rates
If the above results are not reasonable, double check each state to ensure you are not double paying multiple states taxes on the same earned money. (unless so required).
I hope this helps.
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