SE Tax seems to be calculated on “Gross” income, and not “Net”, very concerned.
I filed my taxes today and was horrified at the results. My situation is this:
I used turbo tax to file using QBO to enter my numbers.
In 2017 my “gross” income, prior to business deductions was around $68,000. After deductions, this number came to $32,000. Then, taking the standard personal deduction for filing single, plus a few other personal deductions, my taxable income was about $22,000.
At $22,000, my tax bill was $8,500. That is 37.5%. By the time I pay rent, there is no way this is sustainable. I don’t care if that SE gets me more when I retire, I simply cannot afford it! I will be living on the street. What is wrong? I cannot pay this bill. And I cannot pay estimated taxes to pay next years bill as that would add $800/month to my budget just for taxes, that is more than my rent. I aced my college accounting class, have been using QBO for years and I’m quite savy. What is wrong!? Help!!!
I agree with you that the calculation seems to be incorrect. Unfortunately I am not able to give you tax advice. However, I recommend that you find a tax pro who can take a look at both your QuickBooks files and your tax returns to assess exactly what the issue is. We have an article that provides you with 3-4 resources on how to find an expert.
Good luck with everything.