Income-tax | The Tax Resources Blog

Posts Tagged ‘income-tax’

Income Tax Goodwill

August 26th, 2011

Question: curious to know what deductions/tax credits i can get?

what can an average person do to increase their Tax Return?

me specifically: i’m planning to go back to school in the fall, im an independent contractor, have recently cleaned out my stored items and given them to the goodwill, and im also a new mom. i know these things and probably other things could increase my Tax Return next year. can anyone give a little more insight on these things? im only making about 300/month and i dont pay taxes but will have to report all my income. i dont want to get screwed and i cant afford to save or make payments to the irs at this time.
I’m actively seeking steady work so who knows, I may end up getting a decent paying, FT job. The year is only half over. And yes, I am thinking of itemizing my deductions this year. With my current situation I could use every penny I can get on my Tax Return. Even if only enough to put into fixing my dinky lil car.

Answer: Increasing your Tax Return means declaring more income. What you really want to do is decrease your taxes. (Note to everyone: I mean decrease your *tax liability*. If you want to increase your tax refund, that’s easy. All you have to do is have more taxes withheld from each paycheck or make estimated tax payments.)

Your income thus far is too low for you to have a federal income tax liability. As an independent contractor, you are liable for self-employment tax which is a little over 14% of your income. You didn’t say what you are doing so I can’t be of much help in identifying deductible business expenses.

(The nominal self-employment tax rate is 15.3% if your income is below $106,800. If you have net business income of $10,000, you calculate the tax like this: $10,000 x (1-7.65%) x 15.3% = $1,413.)

I hope this helps.
Gary