Forum Moderators: LifeinAsia
If you mean gross profit is $100K, and you are filing as head of household then you pay Federal income taxes of:
$14,010 + 28% of the amount over $68,800
For state income tax you pay: $1904 + 9.3%
Without knowing your filing status and numerous other details these are only "best guesses".
Adding up the numbers, you will end up paying $45k as taxes? That's 45%!
Plus whatever I spend of whats left has nearly 20% TVA ..
And no.. I am not happy about it ..and yes ...as soon as the finances permit I will be no longer residing in this tax juristiction ...
Only good thing is also owning a UK ltd and doing some stuff through it instead ..
wow.. In the US, state tax has to be paid separately?
In some states (like Florida) there is no state income tax, so you only have to pay Federal. I think Nevada is like this too but I'm not sure. In other states there are state AND county income taxes, which would really suck :P
There are ways around it without moving though. One easy and fairly inexpensive way is to buy a piece of land in a trailer/RV park in another state and declare it as your primary residence. Find a park with mail forwarding services so they will forward any mail that comes to your address there. Then you can get your drivers license and incorporate your business in that state. You can do all of this without moving, although you may have to travel to whatever state you buy in for the closing. You can still own property in California, but on paper you don't live there 100% of the time and the park will forward your mail when you're not there.
FYI you can buy a lot in an RV park for as little as $15,000. You can mortgage these lots just like you would a house or any other land, so you'll only pay like $100 a month or so, plus whatever the park fees are. Even better you can allow the park to "manage" your lot and lease it out to people when you're not there so travelers who park their RV's/trailers on your lot will be paying your mortgage for you :P
Looks lie you are perfect match forthis IRA....
I saved you taxes on 25K (25% of your 100K).. you can send tip me at my paypal address anytime ;)
You don't want to get me started on the Utah State Tax Commission nazis....
Is what you would owe in Federal Tax if you were single and took the standard deduction & exemption (for 2003).
If you set yourself up as a LLC or S corp - you can pay yourself a salary - and take the rest in distributions. You would want to do that in your case - as you could claim a salary of like $35,000 and the $65,000 extra - would not be subject to self employment taxes.
A SEP IRA would also be a great idea for someone in that income bracket.
I don't feel like figuring out the california tax - but it is graduated like the others - and it looks like you would owe ~$6,500
That puts you at about 37%. The Self Employment Tax and Income are what hurt you. By using the SEP-IRA - you can get your income down, and using the LLC - you can avoid paying some FICA/Self Employment Taxes.
The two are interlinked though 0- the income you can count to a SEP-IRA - is only the income you get that you pay all the taxes on - including fica.
Even so - you are better off to take as small a salary as possible (it has to be reasonable - and it is a long story).
This is actually a very common situation and any decent accountant could help you set it up.
digitalv: that dodge doesn't work in Utah
Really? So say I bought a vacation house up there but maintained my Florida residency. You're telling me that I would have to pay income tax to the state of Utah? I don't live there and don't work there. I understand I would have to pay PROPERTY tax, but income tax? Come on. I promise I only have one wife :)
I have THIRTY-SEVEN INCHES OF PAPER to prove that we lost a case due the exact situation as you advise people in your post above. Losing that case cost us TWENTY-FIVE THOUSAND DOLLARS in 1994 - NOT including attorneys' and tax-accountants' fees. Consider how much more that would be today....
You don't really want to go there, do you? Do YOU live in this state? If you don't, then you have NO CONCEPTION. If you do live in this state, then you are willfully blind it seems.
Another little point here: it doesn't matter where you live, if you have income no matter the source, YOU WILL PAY STATE INCOME TAXES ON THAT INCOME (assuming your "state of residence" has income taxes - some do not). So here's the deal: if you have a "trailer park lot" or a bricks&mortar or even a condo in Utah, yet you actually live in an RV rotating between the kids in other states or whatever, YOU WILL STILL PAY INCOME TAX ON EVERY DIME KNOWN AS INCOME, IN THE STATE OF UTAH. Alternatively, if you have a "trailer park lot" or other real property in Nevada, but you spend ALL YOUR TIME in Utah, eventually you will do something which causes the state of Utah to decide that you are actually a full time resident of Utah, and you will THEN pay income tax in Utah. It happens with fair regulartity in this area. I haven't a clue how they actually get this information but apparently they do, because the courts are full of "you say you live in Nevada but we contend you live in Utah" cases, and believe you me, the state of Utah WINS EVERY TIME.
If you actually pay income tax in another state (such as New Mexico), then you are allowed to use that as a portion of your state tax liability in Utah.
I'm not an attorney, nor am I a tax accountant. I DO know what I'm talking about here, however. Had there been ANY WAY to prevent the state of Utah from taking nearly $50k of our hard-earned money, do you not think we would have done whatever was necessary?
You don't really want to go there, do you? Do YOU live in this state? If you don't, then you have NO CONCEPTION. If you do live in this state, then you are willfully blind it seems.
That's crazy. I don't live in Utah, I live in Florida and there is no state income tax here. A while ago I lived in Virginia for about 4 years where they do charge state income tax and I never paid the state a penny because I wasn't a resident of the state and wasn't employed there - I just owned property there. My primary address was in Florida. This wasn't done with a P.O. box or anything like that, I owned a house in both states. Just out of curiosity though, I would like to see Utah's take on the subject. It's one thing if you're caught trying to cheat the system and are living there full time while pretending to live somewhere else. It's another thing if you actually DO live somewhere else and just have say a summer house in Utah - if I don't work there and don't live there, I don't see how they could tax me there.
The vehicle I used while here was registered here. It never went to Nevada. I bought comestibles of all sorts here (except alcohol *sigh* - which never even came up). The state's case was made up of the statements: while one of you lived full time in Utah and had no income (me - and I only lived here about "half-time"), the other lived part-time in Nevada and had income (he was actually in Nevada MORE than he was in Utah - but they refused to enter proof of that in evidence). Utah retains tax-liability to that income earned out of state because one of you lived full time here.
Utah is a VERY DIFFERENT PLACE TO LIVE AND DO BUSINESS. Even if you only have one wife. [BTW, polygamy is "not legal" here. It's only "hiddenly (ugh. HORRIBLE excuse for descriptive, but accurate) practiced". Polyandry on the other hand has never seen the light of day (or should that be dark of night?)]
[[Ah.... apologies for the hijack....]]
it doesn't matter where you live, if you have income no matter the source, YOU WILL PAY STATE INCOME TAXES ON THAT INCOME
I may be off base, but I think that may be the same thing that professional athletes go through. I know (for example) baseball players have to pay an income tax to every state they travel and play in. This so called "jock tax" was specifically put in place to target professional athletes.
Although all citizens are supposed to file tax returns for business executed in visiting states, athletes are singled out because state officials have the luxury of easily monitoring their very public travel itineraries. On the contrary, it's obviously not easy to keep track of Joe Public's business doings in both Utah and Florida. That's why it's "not as big of a deal", or may not be as well known.
digitalv & vkaryl - I think you are both arguing valid and truthful points. vkaryl is saying you have to pay income tax on every penny earned in your non-resident state, which is 100% true. But digitalv isn't talking about earning income in other states, just owning a house (in Virginia). And no, you shouldn't have to pay an income tax in (i.e.) Virginia, because you haven't earned any income from there.
But that was 10 years ago, they got their money and I hope they choked to death on it. We still live here and there ARE benefits to doing so.... but Layne is 15 years older than I am, and WHEN HE DIES, UTAH WILL NEVER SEE ANOTHER PENNY OF MY MONEY FOR ANY REASON UNDER THE SUN.
I may preach forgiveness, but I hold a SERIOUSLY mean grudge.
Just curious - Is the 15% tax or does the 15% go into some kind of pension scheme?
$45k as taxes? That's 45%
I think you slipped a digit there, vig, as the 28% and 9% are the highest marginal tax rates and the average rate will be lower in each case. (At least I think that's the case for CA, I don't live there.)
In reality, at $100K income, chances are you will be in good shape to itemize deductions. A hefty mortgage payment will yield a nice interest deduction, along with some state taxes, charitable contributions, etc. As noted above, there are adjustments to income like retirement contributions, too. If you structure yourself reasonably well, getting down to a 10 - 15% federal rate is quite doable. If you aren't a numbers person, check with a tax pro. (Not someone who took a two-week H&R Block course, but a real CPA or experienced financial advisor.)
Its basically two taxes , social security which is 12% and medicare which is 3% both of which help the seniors living now and hopefully you will also get when you are above 65!
I too think with proper strategy you can have your total tax percentage (fed + state + fica) to 30% on a 100k income if you are in Cali...
Problem comes only when you begin to make more and more than that :) , i myself paid more than 45% of my income to taxes last year :(
California is equally adept at taxing income even if incorporated in another state.
Coincidentally, California is the perfect example of why liberal views don't work :P That sucks though, I guess I've been fortunate that it stays under the radar in the only two states I own property in.
Mike
You should see how they go after retirement benefits too if you earned them in California and then move later.
Oh lord, kirby, I'd forgotten that. My dad's been dead so long now that that stuff's back in a far-distant past.... but yes. He worked for L-Cubed (Lawrence Livermore Laboratories) for 25 years at NTS (Nevada Test Site). He retired and moved to Arkansas. California (wherein L-Cubed is incorporated - or was, no clue now) immediately began to tax his retirement payments (from his employer's retirement fund), regardless that he lived in Arkansas, and actually had NEVER worked in California for L-Cubed (but of course they were the employer of record).
He had to go back to work for Sandia in New Mexico in order to pay the attorneys to fight it. He didn't even come CLOSE to winning.... I gave up even trying to add up the costs of the case after he died - I just didn't want to know.
I think they still do this, right? I don't know how anyone would ever have enough money to fight it and win....
California is the perfect example of why liberal views don't work
I guess that's why California is the richest state in the U.S., because the liberal views adversely affect the economy.
