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| *Ostroff, Fair and Company>>>United States Taxes |
How much taxes should we pay if we made $6500 cash in 2006? |
I have filed taxes for me and my husband for 2005 we got paid by cash - both of us together made $6500 Now we have to pay $970 in taxes Is this right? It seems a lot I live in Philadelphia Thank you for all the help If you got paid by cash as independent contractors you should have received a 1099. If you were employees, you should have received a W-2, but social security taxes should have been withheld. Either way, you should owe no income taxes if that was your only income. However, if you were paid as independent contractors, you owe your self employment tax. That is 15.3% of most of your profit from your business, which works out to about $970. This is equal to the social security/medicare tax that would have been withheld if you were employees, plus the equal amount your employer would have paid. You're not paying income taxes on the money - you are basically paying the self-employment taxes. That's for social security and medicare. If you had been working as an employee, half of that would have been taken out of your paycheck, and the other half would have been paid by the employer. |
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