turbotax icon
cancel
Showing results for 
Search instead for 
Did you mean: 
Announcements
Close icon
Do you have a TurboTax Online account?

We'll help you get started or pick up where you left off.

Freelancer between 3 states

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)

 

x
Do you have an Intuit account?

Do you have an Intuit account?

You'll need to sign in or create an account to connect with an expert.

3 Replies

Freelancer between 3 states

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.

 

**Say "Thanks" by clicking the thumb icon in a post

Freelancer between 3 states

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.

Freelancer between 3 states

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.

message box icon

Get more help

Ask questions and learn more about your taxes and finances.

Post your Question