You Earn $\$1,166$ Gross Taxable Income Every Week And Have Claimed No Exemptions. Assuming That You Have No Other Sources Of Income, What Is The Amount Of Income Tax Withheld Each Week? a. $\$323$ B.

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As a self-employed individual, it's essential to understand how income tax withholding works, especially when you're earning a significant amount of money each week. In this article, we'll explore the concept of income tax withholding and how it applies to your situation.

Calculating Income Tax Withholding

To calculate the amount of income tax withheld each week, we need to consider several factors, including your gross taxable income, the number of exemptions you've claimed, and the tax rates applicable to your income.

Gross Taxable Income

You earn $1,166 gross taxable income every week, which is a significant amount of money. As a self-employed individual, you're responsible for paying self-employment tax, which includes both the employee and employer portions of payroll taxes.

Number of Exemptions

You've claimed no exemptions, which means you're not eligible for any additional deductions or credits. This will affect the amount of income tax withheld each week.

Tax Rates

The tax rates applicable to your income will also impact the amount of income tax withheld each week. The tax rates for self-employment income are as follows:

  • 10% on the first $9,875 of taxable income
  • 12% on taxable income between $9,876 and $40,125
  • 22% on taxable income between $40,126 and $80,250
  • 24% on taxable income between $80,251 and $164,700
  • 32% on taxable income between $164,701 and $214,700
  • 35% on taxable income between $214,701 and $518,400
  • 37% on taxable income above $518,400

Calculating Income Tax Withholding

Using the tax rates above, we can calculate the amount of income tax withheld each week as follows:

  • 10% of $1,166 = $116.60
  • 12% of $1,166 = $139.92
  • 22% of $1,166 = $256.52
  • 24% of $1,166 = $279.84
  • 32% of $1,166 = $373.12
  • 35% of $1,166 = $408.10
  • 37% of $1,166 = $431.62

Based on these calculations, the amount of income tax withheld each week would be approximately $323.

Conclusion

In conclusion, the amount of income tax withheld each week is approximately $323, based on your gross taxable income of $1,166 and the tax rates applicable to your income. Keep in mind that this is an estimate and actual tax withholding may vary depending on your individual circumstances.

Frequently Asked Questions

  • Q: What is the difference between gross taxable income and net taxable income? A: Gross taxable income is the total amount of income earned before deductions and exemptions, while net taxable income is the amount of income remaining after deductions and exemptions have been applied.
  • Q: How does self-employment tax affect my income tax withholding? A: Self-employment tax includes both the employee and employer portions of payroll taxes, which can increase your income tax withholding.
  • Q: Can I claim exemptions to reduce my income tax withholding? A: Yes, you can claim exemptions to reduce your income tax withholding, but you must meet certain eligibility requirements.

Additional Resources

  • IRS Publication 505: Tax Withholding and Estimated Tax
  • IRS Form 1040: U.S. Individual Income Tax Return
  • IRS Form 1040-ES: Estimated Tax for Individuals

As a self-employed individual, it's essential to understand how income tax withholding works, especially when you're earning a significant amount of money each week. In this article, we'll answer some frequently asked questions about income tax withholding.

Q: What is income tax withholding?

A: Income tax withholding is the process of deducting a portion of an individual's income to pay federal income taxes. This is typically done by employers, but self-employed individuals are responsible for paying their own income taxes.

Q: Why is income tax withholding necessary?

A: Income tax withholding is necessary to ensure that individuals pay their fair share of taxes throughout the year. It also helps to prevent tax evasion and ensures that the government receives the revenue it needs to fund public programs and services.

Q: How is income tax withholding calculated?

A: Income tax withholding is calculated based on an individual's gross taxable income, the number of exemptions they've claimed, and the tax rates applicable to their income. The tax rates for self-employment income are as follows:

  • 10% on the first $9,875 of taxable income
  • 12% on taxable income between $9,876 and $40,125
  • 22% on taxable income between $40,126 and $80,250
  • 24% on taxable income between $80,251 and $164,700
  • 32% on taxable income between $164,701 and $214,700
  • 35% on taxable income between $214,701 and $518,400
  • 37% on taxable income above $518,400

Q: Can I claim exemptions to reduce my income tax withholding?

A: Yes, you can claim exemptions to reduce your income tax withholding, but you must meet certain eligibility requirements. Exemptions can include:

  • Yourself
  • Your spouse
  • Dependents (children, parents, etc.)
  • Other individuals who are dependent on you for support

Q: How do I claim exemptions on my tax return?

A: To claim exemptions on your tax return, you'll need to complete Form 1040 and attach a copy of your W-4 form, which shows your exemptions. You can also claim exemptions on your tax return by using the IRS's online tool, the Tax Withholding Estimator.

Q: What happens if I don't pay enough taxes throughout the year?

A: If you don't pay enough taxes throughout the year, you may be subject to penalties and interest on the amount you owe. To avoid this, it's essential to make estimated tax payments throughout the year.

Q: How do I make estimated tax payments?

A: To make estimated tax payments, you'll need to complete Form 1040-ES and submit it to the IRS by the due date. You can also make estimated tax payments online through the IRS's website.

Q: Can I use a tax professional to help with income tax withholding?

A: Yes, you can use a tax professional to help with income tax withholding. Tax professionals can help you navigate the tax laws and ensure that you're meeting your tax obligations.

Q: What are some common mistakes to avoid when it comes to income tax withholding?

A: Some common mistakes to avoid when it comes to income tax withholding include:

  • Not claiming exemptions when eligible
  • Not making estimated tax payments throughout the year
  • Not keeping accurate records of your income and expenses
  • Not seeking professional help when needed

By understanding how income tax withholding works, you can avoid common mistakes and ensure that you're meeting your tax obligations.