Stephen KIng's Message to Romney

[sly_wolf 199]

So its FED + STATE + SS + MEDICARE + UI...31% makes sense to me.

No, state will bring it to almost 38%.

[mawilson 2,133]

I have an unusual year this year since I got a severance payment early in the year and I also became self employed. Our family income will be in the $200 to 250K range which will then plunge next year. I ran my numbers using last years return to estimate my tax liability as married and joint and it comes to 31% .... this include all estimated monies which we have to give to the goverment including social security payments.

Social Security maxes out at $110,100 this year. Even if you're self-employed and pay

the double rate (10.4 percent instead of 4.2 percent), the maximum amount you'd pay is

$11,450. The Medicare tax rate for self-employed persons is 2.9 percent. 2.9% of $250K

is $7,250. 2.9% of $200k is $5,800.

Together, Social Security and Medicare taxes add up to $17,250 if your income is $200k,

or $18,700 if it's $250k. Remember - that's double the amount most people pay.

So that's 8.6% or 7.5% of your gross income respectively for $200k or $250k.

You said your effective tax rate was 31%. Where does the rest of it come from (22.4-23.5%)?

[sly_wolf 199]

Social Security maxes out at $110,100 this year. Even if you're self-employed and pay

the double rate (10.4 percent instead of 4.2 percent), the maximum amount you'd pay is

$11,450. The Medicare tax rate for self-employed persons is 2.9 percent. 2.9% of $250K

is $7,250. 2.9% of $200k is $5,800.

Together, Social Security and Medicare taxes add up to $17,250 if your income is $200k,

or $18,700 if it's $250k. Remember - that's double the amount most people pay.

So that's 8.6% or 7.5% of your gross income respectively for $200k or $250k.

You said your effective tax rate was 31%. Where does the rest of it come from (22.4-23.5%)?

From IRS Pub 15 (Circular E) Wage Withholding Tables for 2012

[mawilson 2,133]

From IRS Pub 15 (Circular E) Wage Withholding Tables for 2012

You forgot to include the table. And someone actually +1'd you for that.

[sly_wolf 199]

You forgot to include the table. And someone actually +1'd you for that.

Page 37 - Table 7 in the link below:

http://www.irs.gov/pub/irs-pdf/p15.pdf

[I AM NOT THAT GUY 5,715]

Page 37 - Table 7 in the link below:

http://www.irs.gov/pub/irs-pdf/p15.pdf

I thought you were self-employed.

[sly_wolf 199]

I thought you were self-employed.

Yes.

[mawilson 2,133]

Page 37 - Table 7 in the link below:

http://www.irs.gov/pub/irs-pdf/p15.pdf

This table specifies the withholding rate, not the tax rate.

Also, ☼ is right - if you're self-employed, you wouldn't have any taxes withheld. Instead,

you would send estimated tax payments to the IRS quarterly using Form 1040-ES.

[sly_wolf 199]

This table specifies the withholding rate, not the tax rate.

Also, ☼ is right - if you're self-employed, you wouldn't have any taxes withheld. Instead,

you would send estimated tax payments to the IRS quarterly using Form 1040-ES.

Yes, I know that. I think we have gone off track.

I was only trying to point out that the estimate of total tax payments was being understated. For example, being self employed I have to pay a self employemnt tax rate of 13.3% alone. After all taxes amounts are factored in the total cash outflow for taxes is much larger percentage of income than what was written earlier.

[mawilson 2,133]

Yes, I know that. I think we have gone off track.

Hey, you're the one who posted it. I don't know why you posted the withholding tables.

For example, being self employed I have to pay a self employemnt tax rate of 13.3% alone.

Not really. As I calculated earlier in the thread, it's 7.5% or 8.6% (for $200k and $250k respectively).

[sly_wolf 199]

Hey, you're the one who posted it. I don't know why you posted the withholding tables.

Not really. As I calculated earlier in the thread, it's 7.5% or 8.6% (for $200k and $250k respectively).

Someone had asked about the tax table.

The self-employment tax rate for self-employment income earned in calendar year

2011 is 13.3% - Source IRS http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

[james&olya 1,121]

Someone had asked about the tax table.

The self-employment tax rate for self-employment income earned in calendar year

2011 is 13.3% - Source IRS http://www.irs.gov/businesses/small/article/0,,id=98846,00.html

You have stated something which is not true, otherwise known as a lie. You could be forgiven if you had earlier stated your income was below the cutoff level for SS contributions but we all know you are claiming to have an income above $200,000, about twice the cutoff for social security contributions. So the averaged amount for you is actually far less than 13.3%. Do you just not get it or are you deliberately trying to misrepresent the truth? Which is it?

[mawilson 2,133]

You have stated something which is not true, otherwise known as a lie. You could be forgiven if you had earlier stated your income was below the cutoff level for SS contributions but we all know you are claiming to have an income above $200,000, about twice the cutoff for social security contributions. So the averaged amount for you is actually far less than 13.3%. Do you just not get it or are you deliberately trying to misrepresent the truth? Which is it?

Thank you. I actually calculated it for him earlier - the Social Security part of self-employment tax up to the cutoff point, and the Medicare part of self-employment tax (which all of his wages are subject to).

[sly_wolf 199]

You have stated something which is not true, otherwise known as a lie. You could be forgiven if you had earlier stated your income was below the cutoff level for SS contributions but we all know you are claiming to have an income above $200,000, about twice the cutoff for social security contributions. So the averaged amount for you is actually far less than 13.3%. Do you just not get it or are you deliberately trying to misrepresent the truth? Which is it?

[mawilson 2,133]

Perhaps, but it's your failure to communicate, not James's.

You originally claimed that your effective rate was 31%, and as proof, posted withholding

tables (which have nothing to do with your tax liability), links to self-employment tax

rates (without fully understanding how they apply to your situation), and other red herrings.