The Small Business Tax Help Blog

Posts Tagged ‘brackets’

Question: I need to find out if I am withholding enough taxes. I make $63,000 a year,have a child and wife to claim. ?

I also have a mortgage with claimable interest. This is my first year in this tax bracket. About 25% of my pay goes to taxes. I pay MD state tax.

Answer: Go to www.irs.gov and click on the individual tab. There is a withholding calculator that can help you out a lot in determining what your refund/payment will be. You just need your last paycheck and a bit of other information. I have used it over the last few years and find it very helpful.

I put the whole link in the source area.

Investing & Personal Finance Tips : How to Calculate Salary After Taxes

Question: I own a small business and would like to get some equity out of it. Dividend or lump sum wages?

I am unsure of the most tax effective way to get the money out. If I pay myself as a dividend, then I must pay business income tax on the equity. If I pay myself as wages, then I pay personal income tax on the wages. I am in a fairly high tax bracket (~$95000/yr) and the amount is $10000.

Answer: You can obvioulsy ignore "Mike L"'s suggestion, since (other than illegal false transactions) it offers no difference from your current dilema.

Without running specific numbers, it would appear that you will see little difference whichever way you choose to do this, and in fact, that is the intent of the tax laws, that income from either method will be roughly equivalent.

Since your income is a little below the maximum RRSP contribution threshold, I would suggest you take wages, which will increase your present or future RRSP room.

Wyden posts tax reform

Senators Ron Wyden (D-Ore.) and Judd Gregg (R-N.H.) introduced Tuesday a proposal to vastly simplify the nation’s tax code by cutting the number of personal income tax brackets in half and flattening the corporate tax rate.

Dems' Job-Killing Policies Highlighted at House GOP's "Where Are The Jobs?" Roundtable