Posted by: Count Your Blessings on 2011-03-07, 14:55:58
You’ve not provided enough data for a complete answer as it will depend on (1) how much of the $5800 represents net income, i.e., what are your costs of doing business? (2) your filing status, (3) how much other taxable income you have. Without knowing more, I cannot determine your marginal tax bracket for 2011. You can look it up @ bankrate.com/ finance/ taxes/ 2011-tax-bracket-rates.aspx#ixzz1FxPLS800 In addition to paying tax at your marginal tax rate, you’ll owe self-employment taxes. This is an amount equal to 12.4% (or 6.2% + 6.2%) is paid in total for social security tax, and an amount equal to 2.9% (or 1.45% + 1.45%) is paid in total for Medicare taxes. Given that you are self-employed, you are both the employee and the employer. As such, you are responsible for paying both halves of the social security and Medicare taxes, or 15.3% in total. We simply call the tax something different; we call it the Self-Employment Tax. This sum is in addition to your income tax which is paid based on your marginal tax rate. Hope this helps a bit!