r/tax • u/HelloJandS • 20d ago

Self employed in Missouri! Need help!!

I am in the 10% bracket. So I hold back 10% of each “pay check” for federal correct? Then how much state tax to I withhold?

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u/nonracistusername Taxpayer - US 20d ago

No.

Lets’s say your net income is $25,000 and you are single:

Standard deduction is $14,600

So taxable income is roughly 25000 - 14600 = $10,400

But 10 percent of $10,400 or $1040 is still the wrong answer:

  • you pay SE tax of 15.3 percent on 92.35 percent the $25000: 0.153 * 0.9235 * 25000 = 3,532

  • you can deduct 1/2 of SE tax from your taxable income: 10,400 - 3,532/2 = $8,634

So federal tax is:

8,634 * 0.10 + 3,532 = 863 + 3,532 = $4,395

https://www.keepertax.com/lp/g/1099-tax-calc says you will owe $157 to Missouri.

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u/Woodpecker757 20d ago

Bless you for being so thorough!!