@csbbct wrote:
@a_c_green wrote:
@nocoolnamejane wrote:
Unfortunately that’s the downside to not keeping up with your accounting 😞
That's true, and I am definitely no expert at that either, but still... 9K in taxes on 22K in income? That seems a bit... steep?
It depends on other household income already reported that year. For instance, a spouse's income could already puts someone in a 28% bracket and standard deductions and exemptions were already deducted from that income so IRS is now figuring 28% tax on the whole 22k gross. That would make the tax $6160. Now add an estimated tax underpayment penalty of approx $200, a failure to pay penalty of approx $600, and interest of approx $550 that would total $7510 due now. The next tax bracket up from that would be roughly $8800 total due. So it's conceivable it could be high for those reasons or for other possible reasons that we are not privy to.
nobody*s_perfect
"The tax owed would also include the money that should have been paid on Schedule SE, which is a self-employment tax of 15.3%. On $22K that tax alone would be $3366."
Wow, I can't believe I forgot about self-employment social security tax when I was writing the above response - good point!
So now, even if other income puts them in a much lower 15% tax bracket for this 22k, including this additional SE tax, late penalties and interest it could easily total $8000 in taxes on the $22,000.
But, after cost of goods sold, eBay & Paypal fees, shipping, and all the other expenses lower that $22k to a net taxable profit, it's possible the tax liability could end up less than half of what IRS is indicating at the moment, at least for 2017 taxes.
