Dear Uncle Sam: I hate you, too.: seanan

Dear Uncle Sam: I hate you, too.

So here's the basic thing: I grew up below the United States poverty line. Way, way below the poverty line. "I really thought yellow boxes meant it was food" and "let's have government cheese sandwiches" levels of below the poverty line. One thing you don't get when you're below the poverty line in America? Dental care. Combine this with a dental phobia (brought on by the rare occasions when I actually saw a dentist, as the dentists assigned the charity cases were often shouty) and an adulthood spent largely temping, and, well. Nothing good can come of this.

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.

...go 1 level up... Expand

adb_foldem

October 19 2009, 19:52:29 UTC 7 years ago

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Check with a tax professional before you pull a stunt like this. S Corps are required by law to pay appropriate salaries to their owner/employees specifically to prevent this kind of fraud. You can become liable for extensive penalties and interest that will make your tax rate look puny.

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.

seanan_mcguire

October 19 2009, 20:07:25 UTC 7 years ago

Except that a) the taxation comes all at once, and b) once you've had that much all-at-once tax penalty, you basically need to go to quarterly taxes. In publishing, the rates of payment aren't predictable the way they are at the day job. I don't get a monthly check, and have in fact received no money from my writing in 2009. Yet I've paid over 3k in taxes against my writing income.

Also, with the taxes at my day job, I have deductions. With writing income, especially first-year writing income, deductions are very different things, and very odd in a lot of ways (books are deductible, which is kind of cool, but what good does that do you if you haven't been saving receipts?). So instead of paying a little bit every month, skimmed off the top and made as painless as possible, I get the immediate "here is your huge liability, good luck finding ways to not owe us your firstborn." The combination of initial tax liability, without medical withholding, and over-the-course-of-2009 liability against income I haven't received, is really the problem.

October 19 2009, 21:15:17 UTC 7 years ago

Quarterly payments only require that you pay the actual tax liability for that year not some imagined number from other years. If you have no income, you have no liability. Again I urge you to get a tax accountant and take their advice in these matters. Oh yeah. Keep your receipts.

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Dear Uncle Sam: I hate you, too.

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