Because I am a working author with a day job and good dental insurance for the first time in my adult life, I thought "hey, I'm finally in the position to actually pay to have all the necessary work done." Not "the cosmetic work." The "chewing is fun and awesome and I enjoy being able to do it" work. I found a dentist, I organized my finances as responsibly as I could so that I would be able to pay for everything...
...I got slapped upside the head with self-employment taxes, which, as anyone who's ever looked at the forms can tell you, is obscene. They don't adjust for your situation, either. There's no box to check for "I need lots of medical work, I am employed by a non-profit, and I live in one of the highest cost-of-living regions of the country, so please, don't assume I can afford what you're asking me for." If you make ten dollars income that can be hit with the self-employment taxes, the government wants between three and five dollars of that, even if you're not going to get any more money that year.
Why am I bitching about this now? Because I finally got my full estimate for the rest of my dental work. And that, combined with my final quarterly tax payment for the 2009 tax year, will basically kill my savings account, which I have worked so very hard to build. A lot of my expenses for the year have been deductible—including a lot of my medical, given the level of extensive that it's achieved—but the bills still have to be paid now. If it weren't for the sheer scope of the taxes I've had to pay this year, I'd be fine. Instead? I'm crazy irritated.
Screw you, too, Uncle Sam.
October 18 2009, 20:04:14 UTC 7 years ago
October 18 2009, 20:05:22 UTC 7 years ago
7 years ago
October 18 2009, 20:04:35 UTC 7 years ago
Taxes in this country are insane, given how little we get for them. I'd actually cheerfully pay more if health and dental and decent schooling and proper vacations were built in, but as it is, I am BITTER.
And you have more reason to be!
October 18 2009, 20:10:42 UTC 7 years ago
On the bright side, once the IRA is gone we'll get a huge help with weatherizing the house.
October 18 2009, 20:22:21 UTC 7 years ago
October 18 2009, 20:23:14 UTC 7 years ago
October 18 2009, 22:43:05 UTC 7 years ago
None of which helps with the immediate question of "how do I pay bills?", because while Uncle Sam might demand quarterly estimates and payments from those of us without standard withholdings, god forbid he give us quarterly estimated rebates, even if we really deserve them.
October 18 2009, 20:42:41 UTC 7 years ago
So any self-made income I get these days (nothing at the moment) gets 50% taken out and put in savings to pay the taxes when April rolls around.
I dearly hope somebody in the gooberment eventually does something about this but that may just be the cold medicine tweaking my sanity.
October 18 2009, 20:53:55 UTC 7 years ago
"Incorporate. Not to protect against lawsuits -- tho as a
non-fiction writer that's a consideration -- but for
economic reasons. If you buy a car, it's not deductable
or depreciable; if your Subchapter S corporation does, it
is. If you buy health insurance, it's not deductable; if
your corporation buys it for its only employee (you), it
is. And so on.
The main thing is this. Let's say you earn $70,000 writing
next year. As a private individual, you have to pay a
self-employment tax (which exactly equals FICA and Medicare)
of 15%, or $10,500.
But if your corporation puts you on a $10,000 annual salary,
the FICA and Medicare payment will be $1,500, a tidy savings
of $9,000.
You will pay -income- tax on your profit either way...but,
again to simplify, let's say it's all profit. The corporation
will pay you a -dividend- of $60,000, and you'll pay income
tax on it...but you won't pay FICA and Medicare because it's
not salary.
Now, donating that much less to FICA can come back and
bite you in the ass when you turn 65 (or 70, as it figures
to be in a few years), but a) you probably need the money
more now, b) who knows how long you're going to live, and
c) what writer every quite just because he reached retirement
age? In fact, what writer ever quit, period?"
October 19 2009, 19:52:29 UTC 7 years ago
The tax rate on your self employment earnings is only 7.65% more than if you earned it at your day job. Frankly it seems like your whining about paying any taxes at all, which we all can sympathize with.
7 years ago
7 years ago
October 18 2009, 20:58:02 UTC 7 years ago
For a country that supposedly prides itself on self-made-men (er, people), the tax infrastructure certainly suggests otherwise.
*sympathy*
October 19 2009, 11:57:52 UTC 7 years ago
October 18 2009, 21:46:47 UTC 7 years ago
Dental care can be expensive here for adults but at least all children under 16 get it free.
October 18 2009, 22:33:19 UTC 7 years ago
October 19 2009, 04:50:06 UTC 7 years ago
How's your supply of poisonous wildlife?
7 years ago
October 18 2009, 22:47:22 UTC 7 years ago
And I wince in sympathy. Either one of dentistry and self-employment taxes is bad. Together at once? *shudder*
October 18 2009, 22:49:31 UTC 7 years ago
October 19 2009, 00:12:24 UTC 7 years ago
7 years ago
October 18 2009, 22:53:03 UTC 7 years ago
October 19 2009, 00:38:28 UTC 7 years ago
October 19 2009, 11:55:59 UTC 7 years ago
October 19 2009, 00:58:24 UTC 7 years ago
Deleted comment
October 19 2009, 02:07:42 UTC 7 years ago
October 19 2009, 03:53:01 UTC 7 years ago
You're in the habit of giving away content. Songs, poems, the "Velveteen vs." stories, even your general LJ posts, all provide entertainment to your friends and fans.
Which is a long-winded way of pointing out that you, in particular, would be thoroughly justified in putting a tip jar on your web site.
October 19 2009, 04:04:54 UTC 7 years ago
7 years ago
7 years ago
Incorporation, etc
October 19 2009, 04:49:12 UTC 7 years ago
Health insurance *is* deductible, as an individual, but if your medical expenses aren't above 7.5% of your AGI, you don't get the credit. You really only get the benefit if you've had nasty nasty medical expenses.
When health insurance is paid by the corporation, it's an ordinary business expense.
Do get *QUALIFIED* and *COMPETENT* advice. If I recall correctly, Janis Ian had a post on her web page regarding accounting troubles with a business manager. If you fall into the trap of "Oh, my accountant/agent/business manager handles that", you end up with tax problems like Willie Nelson & Wesley Snipes.
Good luck! Just remember, Nevada, Texas & Florida have 0 state income tax. I'm just saying....
Re: Incorporation, etc
October 19 2009, 14:18:11 UTC 7 years ago
October 19 2009, 11:16:35 UTC 7 years ago
U.S. self-employment taxes sound rather a lot like Canadian income taxes. Except minus the tax-funded health-care benefits (alas, NOT including dental) that come with it.
:-P
I hear Victoria's lovely. Wanna live on an island? ;-)
October 19 2009, 11:27:21 UTC 7 years ago
October 19 2009, 15:36:49 UTC 7 years ago
October 19 2009, 17:49:30 UTC 7 years ago
We may have been four kids with a single Mom who worked nights, but Mom had gone through her life without proper vision OR dental care, and woe if that was going to happen on her watch.
Mom turned into the biggest wheeler-dealer and negotiator when it came to medical care I ever saw. That's what friends and coworkers were for! (And the fact she was always considerate, grateful and never wasted a thing didn't hurt, either.)
My dental care was provided by a dentist who kept Arabian horses on the same property as his dental offices. Yes, I went out and petted ponies while I waited my turn for fillings and the like.
I've bought dental insurance as presents - my privilege is aghast to see people going without.
(And I understand Delaware is the state to incorporate in. Ask that wonderful accountant.)
October 20 2009, 14:44:10 UTC 7 years ago
I have a specific "tax account" at the bank and between one quarter to one half of EVERY payment I get (depending on the year I'm having, you'll get the feel for that after a while) goes into it.
But yeah, it kind of sucks. Especially since you see less bang for your tax buck than we do up here.
October 20 2009, 14:47:46 UTC 7 years ago
It makes my brain hurt real bad.
7 years ago
October 22 2009, 19:13:56 UTC 7 years ago
October 28 2009, 22:32:17 UTC 7 years ago