A community of 30,000 US Transcriptionist serving Medical Transcription Industry

Paying Taxes, I'm freakin out - Michele

Posted: Feb 24, 2010

I am about to do my taxes for 2009. I had a bunch of money saved up to pay them, but I fell on hard times (little to no typing jobs) and had to use that money to pay bills. What is going to happen? I made 11,000 last year. How much can I expect to owe? What if I don't have the money?????

payments - IRS

[ In Reply To ..]
You should be able to make a payment arrangement with them. I have the past 3 years. I pay $50 a month to each, federal and state, until I'm paid off. They do charge penalties, but I am lousy at saving money.

as far as I know up to $ 10,000.-- /year = no taxes... - taxes

[ In Reply To ..]
So, you have only to pay taxes on the $ 1,000.--, but you have to declare your whole income.

This is if you are filing as a single person.

Correct me if I am wrong, please!

? is that how you do it? - Michele

[ In Reply To ..]
Is that how you have done it? I made less than that in 2008 and paid in. I thought it was up to $650 you dont have to pay taxes on.

I am a totally different case.......... - see message

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The fact is that if your yearly taxable income is or under $ 11,000.-- (I thought it was 10,000.--) you are not paying taxes on this amount, but you have to DECLARE it.
I think you should not have paid taxes in 2008.

I am not a tax expert, that's all I can tell you.

Self Employment tax/ FICA Medi - Bad Rabbit

[ In Reply To ..]
I believe that the self employment tax referred to earlier is social security and medicare. If you are an employee, these amounts are matched by your employer. If you are self-employed you are responsible for the entire amount yourself. The factor would be approximately 0.153 per each dollar earned. As far as I am aware, none of this is subject to refund as state and federal taxes are. There is also, to my knowledge, there is no threshold at the lower income levels where you would not be responsible for this. I am not a tax advisor, so you will want to check this information with a tax professional. Additionally, there may be a penalty for not paying taxes quarterly depending on whether or not you owe. There is a wealth of information on IRS.gov, but it is sometimes confusing. If you owe taxes and are able to make a payment plan there will be interest and possibly penalties.

You might be right! I forgot totally about SS and Medicare. - .

[ In Reply To ..]
nm

See, this is what I thought. - anon

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I've been following this thread because I'm in a similar situation to the OP. I thought it was a straight 15.3% on all income if you are self-employed.

15.3 - Bad Rabbit

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The 15.3% is only Fica and medi, that does not include any state or federal income tax providing you make enough to owe federal or state.

That would be $ 1,700.--in OP's case - taxes

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nm

Providing that there were no deductions - Bad Rabbit

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That is entirely possible.

I don't know. - Meeeee

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I only made $12,000 the year before last and had to pay a little over $700.

You may get money back if - 11K is under poverty level

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If I'm not mistaken. That may qualify you for earned income tax credit refund and other goodies.

Self-employment tax is what will be the problem possibly. - But even that will be 300.00

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I made about 7,000 as an IC and had 300 to pay federal for SE tax. Were you an IC?

Yes, working as an IC - Michele

[ In Reply To ..]
Yes I'm working as an IC

does not matter, in your case you will not have to pay any taxes on YOUR income - .

[ In Reply To ..]
nm

As far as I know............. - see message

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A yearly total "taxable" income UNDER 11,000.-- is all exempt from taxation, also for self-employed, but has to be declared, IRS deducts it then.

What is "taxable" income? Only income EARNED IN THE US by ACTUAL WORK, not interests, etc.......

why did i have to pay last year on less than 11,000 then? - Michele

[ In Reply To ..]
Why did I have to pay in 2008 on less than 11,000 then? Did I do something wrong? Man, I'm hiring an accountant this year!

Can someone please explain all these messages simply? For my 11,000 what should my tax process be and what can I expect while doing taxes?

Did you declare other taxable income or only these 11,000.--?? - .

[ In Reply To ..]
Are you a "dependent" of some sort?

If I were you I would no way hire a CPA... - .

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but I would ask the IRS why you had to pay taxes.
You can do this online.

P.S. or enclose a note with your questions - .

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in your 2009 tax declaration, in case you file by mail, not online.

Taxes - KYMT

[ In Reply To ..]
You can go to www.taxfreedom.com and do your federal taxes completely free if $11,000 is the only income you are declaring, and in some states, you can also file your state taxes. This is a program that uses Turbo Tax and guides you absolutely step-by-step through the entire process. If you are married, you are better off filing jointly because you get more deductions that way. You can always go through this program and see what it tells you if you owe or get money back. You should have some business expenses you can deduct such as a home office space, etc., but again that is all covered on the program. Another resource would be to check in your community to see if there are people who will prepare your taxes for free, based on your income level. Good luck!

Why do MTs bother? - MT who knows

[ In Reply To ..]
You MTs are making poverty wages; yes, I said p-o-v-e-r-t-y wages. Why in the world do you even want to "hire" an accountant for the miniscule money that you make and also go through all the headache of self-employment taxes, etc., etc. I say get a real job that actually pays something and let the department whose job it is to do payroll handle your taxes -- that is what the rest of the real world does. I mean having to deal with all of that for MT wages is ridiculous. Take a shot of reality.

Why do I bother??!! - sgill

[ In Reply To ..]
I bother because I worked about 25 hours/week and made over $52,000 last year. I paid in my income tax quarterly and ended up getting money back after I filed. That's why I bother! Some typists make less but those of us who prefer to STAY at home find it to be WELL worth varying wages and being responsible for our own taxes. I have stayed home with my 6 year old and now doing the same with my 10 month old.
So I do it because I love being home with my children first and foremost.. but I also rather enjoyed my non-poverty level income. There.. I'm done ranting now!

Kudos to you! - Bad Rabbit nm

[ In Reply To ..]
nm

Thanks, Bad Rabbit. - sgill

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always crusading for the little guys.. that's me.

sgill ... you know this post was for the poverty wage MT; yet, you still responded. - n/m

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..

I'm sorry, I was trying to voice my approval - Bad Rabbit

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of your post and why you bother. I was agreeing with you.

you're my role model - well done! : )

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:)

How can you work 25 hours/week and make $ 52.000.--/year? - huh?

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That means $ 40 (forty) per hour.

I think you have a typo in there.

Or, what is your profession?

believe it or not - sgill

[ In Reply To ..]
I don't get paid by the hour. I get paid by the character. If you break down my line rate on my private account with the oncologist I type for then I make well OVER 40 per hour. More like 60-75. Maybe I had the amount of hours I work wrong. Perhaps it's less than 25. LOL I love being an MT! When the $ is good it is great! But there are down sides. I am currently struggling to learn a new account to replace that one :( But at least I have the skill and mind set to go for it. No typos. That's the name of the game. :)

Exactly! That's Why I Bother Too - MT Who Also Knows

[ In Reply To ..]
Just as it is with any career,

-Some will do exceptionally well, which is about $60,000 from my personal experience.

-Some will do above average, which is $40,000 to $60,000

-Some will do average, which is somewhere in the $30,000 area by my estimation

-Some will do below average, but be very happy because of the perks of being able to work from home, save money on car expense, clothing, daycare, etc.

-Some will fall through the cracks or even fail miserably.

That happens in nursing, car sales, real estate, owning your own business, web site design (something everyone thinks they can do unfortunately), law (lots of unemployed or under-employed attorneys out there), and salespeople (groaning when they look at their paychecks/commissions these days).

Why do I bother? - Pat

[ In Reply To ..]
I envy you if you really make $52,000 only working 25 hours a week. I worked for 35+ years in transcription, most of the time with a huge group and NEVER made that working 40 hours a week. Of course, I did have perks such as pension and profit sharing, etc.

As many other posters have said recently, it is a "dead" profession now and more and more companies are using electronic records and bypassing the entire transcription scene. The ones that aren't using it end up using voice recognition so that instead of typing these reports, one sits by the hour and edits them. I would never want to do that, boring.

Well, you weren't specific in your post. - sgill

[ In Reply To ..]
I didn't realize you were only targeting those who made lower incomes. Yes. Shame on them for having a skill to help provide for themselves (however "minuscule"). When I started out seven years ago I was also making 'p-o-v-e-r-t-y' level income. It doesn't happen overnight. It took two years to break 24K but I had my husbands income to get us by. I soon eclipsed his income (police officer) and 2009 is the first year he's matched me after multiple promotions on his part. And here I am. If I hadn't bothered then my girls could have been chucked into the first daycare that came along and I could be out busting my butt for less money than I make now even if I utilized my bachelors degree! I'm just saying don't be mean. Everybody has to start somewhere. Nowadays a living in MT work is harder to come by and we will all have to evolve or get buried. But at least they are trying.

love my poverty - at

[ In Reply To ..]
Well, I make $35 to $40 an hour. Call me crazy, but that is hardly modest or poverty. I got $5,000 back on my taxes this year with the help of my CPA. So, call me crazy again, but I will gladly pay her a few hundred for that refund. If this is poverty, I'll take it.

somebody whose income is 11,000.- will spend all his refund on the CPA - no way = DIY

[ In Reply To ..]
nm

Everyone is different - at

[ In Reply To ..]
That is why each person needs to evaluate their own situation. There are years where I only earned $8,000 to $12,000, and we still paid a CPA. Why? Because my husband also works, and his income is much greater. So, we still received large refunds. If the only household income is $11,000, then one should probably not pay a CPA. So much depends on circumstances, and that was my point above. It is hard to advise someone without knowing intimate financial details. We can, however, all recommend different options and then people can decide for themselves based on their personal finances.

I also recommend if you do use a CPA to try to use a local firm. We found local firms far cheaper than H & R Block for ICs.

more thoughts - at

[ In Reply To ..]
Another point for a CPA -- In the past, if we owe, our CPA has found ways to reduce our tax burden by hundreds or thousands. So, if you hypothetically owe $2,000, and then the CPA cuts it to $1,000 and charges you $200 for services, you have just gained $800 by owing less through the expertise of a CPA. If you are extremely knowledgeable on taxes, then you may not get that benefit, but for someone who is uncomfortable with taxes and not very knowledgeable, a CPA can reduce that burden. You also get peace of mind if you are audited.

MT who knows what?? - Give me a break

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Not much from what I read in your posts, much misinformation. I am a self-employed MT and make well over minimum wage. I have a real job that pays very well, but suspect with your intelligence maybe you are in a minimum wage job...or maybe it is just that you are very bored with no life and just trying to rile people up? Darn, I fell for it. LOL

Oh please - MT who knows

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No . . .not a minimum-wager . . . just someone who doesn't buy into the MT hype anymore. My intelligence, well, I am a university graduate (from a major university), and I wonder how many people are still buying the pie-in-the-sky BS about MT wages.

Oh please? - at

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I am a university graduate from a major university as well, and I come from a family of PhDs, lawyers, doctors and the like. I guess that makes us at least equally intelligent if you buy into the idea that education equals intelligence. So, MT may not have been successful for you, but it is successful for other people. Insulting others and lecturing not only turns people off, but rarely allows either side to learn anything or exchange ideas in an intelligent manner.

Thank you, could not have said it better myself. - Give me a break

[ In Reply To ..]
Especially the part about education does not always equal intelligence. Some just never learn (or are unalbe) to apply what they were suppose to have learned in school and do not make it very successfully in the MT field and then blame the "system" for it. I will bet some of those are the ones who constantly complain about being "picked on" by QA.

I was just thinking of all the University Grads I know who can't find a job. - Glad you said it and not me

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I would say from life observation over the years that common sense is worth more than that university education, unless you have both plus a good attitude.

oh, there she is, miss mt know it all. ugh NM - slumming?

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.

yes, true, if your total "taxable" income is under or $ 11,000.-- - taxes

[ In Reply To ..]
nm

taxes - at

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A lot depends on your situation as well. I file married and combine our incomes. I have never paid out on my income, because my husband usually overpays on his. We usually end up with a refund. I am not sure how much I would have to pay if we didn't file married -- but our income as a family matters more than my individual income. So, if your income was the only household income, you likely will not have to pay taxes or pay much on it, since deductions should wipe out your taxable income. (This also depends on your deductions!) We always pay an accountant to make sure it is correct.

Find a CPA .. make sure you take all your deductions! - Good luck!

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I figure about 20-25% of gross income and it has worked for me :)

So basically I'm looking at paying about $2000? - Michele NM

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So basically I'm looking at paying about $2000?

If you have no deductible business expenses - Bad Rabbit

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That may be the case.

Taxes - Ezy explaination

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I found this explaination on a Yahoo question board.

Self-employment taxes are roughly 15% of your net (gross income, less expenses).

Then you owe income tax. The percentage of you income tax depends on your tax bracket. If your income tax rate is about 20%, then the total tax liability will be about 35% (20% income tax, 15% self-employment tax)

Yes, it's expensive to be self-employed. Because you are in effect your own employer, you pay for the employer's part of SS, and the employee's part. Plus - for workers, the SS tax is withheld from their paycheck at a flat rate, and so they don't "feel" it. You definitely feel it when you have to write a check and mail it in.

People who are in the 35% tax bracket end up paying about 50% of their net income in taxes (35% income tax plus 15% self-employment tax)

You need to determine what YOUR Income tax bracket will be based on YOUR earnings, then you can ballpark figure what you owe. No way getting around paying the self-employment taxes you did not pay all year.

I used to do IC work and my CPA told me - L&L

[ In Reply To ..]
I was going to be keeping less than 50% of what I earned; FICA just kills you.

A couple of years ago I had to make arrangements for payments ($2500) because of a TIAA/CREF widthrawal. They ASKED me what I could afford to pay; they did not tell me what I had to pay.

Once you sign up for payments, you are required to file your taxes every year for the next 5 years. Made me really wonder how I would go about NOT filing my taxes for 5 years.

If I die in debt to the IRS, nothing could be sweeter (all my assets are in cash or my daughter's name).

tax liens are the first to be paid out of your assets. - .

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It's best if you give all to your daughter before the IRS can get it.

examples of deductions - just my 2 cents

[ In Reply To ..]
if you have a dedicated office/work area, you can figure that square foot and whatever percent that is of your home, you can take that % of your household expenses (power, water, insurance, etc.)

Don't forget real estate taxes.

Don't forget your supplies (paper, pens, markers), equipment (chairs, lamps, floor mats, headsets), equipment repairs, internet fees, any advertising or gifts. Mileage if you do pickup/deliveries (need backup)...

In 2009, if you bought a car you can deduct the sales tax .....

If you donated to Haiti, I believe you can take it off for 2009.

Be sure to add up your medical (including RXs), it is a hard deduction to get, but every little bit helps!

There are many deductions people do not take because they do not know about them --- that is why it is best to get yourself educated with a good tax preparer. The wealthy people have accountants who know and automatically do all these extras; I know before I got my CPA there were several totally legitimate deductions I was not taking and it has made a huge difference in my tax liability.

Don't freak out - IRS works with people - Ive made payments in the past

[ In Reply To ..]
They have always been very very accommodating in the past. If you didn't pay any taxes at all you may have to pay a penalty fee. Don't think it would be that bad. But I am not a tax person, so definitely contact someone. I've been using H&R block for years. I never do my own taxes. I'm very happy with H&R block.

Info overload! - sgill

[ In Reply To ..]
I made around 50K after business deductions. I paid in 7,500 in quarterly taxes. I got back a little less than 500 in refund. Cutting it close? Who... me? That's 15% but I may be in a different bracket. Don't know if that helps you but maybe it will.

The first and most important thing is to make sure - you FILE.

[ In Reply To ..]
The main problem people get into when they owe taxes they can't pay is that they don't FILE THE RETURN. Not filing is MUCH more serious than not having the ability to pay taxes owed. The IRS will acommodate payments, as long as the taxpayer doesn't appear to be evading taxes.

More to the point, perhaps, is that if you're an IC (as it sounds like you are), you should have been filing quarterly estimated returns (with the estimated amount of tax owed), and then you don't have that money burning a hole in your pocket, because there is ALWAYS some dire "reason" or "emergency" to justify spending it. For most of us, it's trying our self-discipline too much to have that money sitting around, and it keeps us from having to find other solutions to the inevitable financial problems that would almost certainly be better than spending money that is owed for taxes and that really isn't ours to spend.

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