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Okay, I don't know if this is a question that can be answered, but I am wondering what the overall percentage of taxes to set aside from my pay is. I am talking about before deductions or anything else. I have been told that, at the start, I would owe about 10% to the Federal Government, 5% to the State (Michigan), and 8% to FICA. That means that out of my $2000 monthly I will have to set aside $460! I know that is high because it is without deductions, but is that really the starting point?? ouch.
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estimated taxes
You will pay federal and state taxes on your profit, not your income. So, you need to take into account all of your expenses before estimating your taxes. You will owe 13.3% of your profit in Social Security/Medicare taxes. You will owe federal income taxes based on your family's adjust gross income. This tax rate varies depending on whether you are single or married. The tax rates are 10%, 15%, and 25% for most people.
As a rough rule of thumb, you might owe about 20% of your profit to pay your Social Security/Medicare and federal income taxes.
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