This year, I'm writing a check for nearly 50% of what I earned in 2020. I have it saved up in account, and I'm paying it in one lump sum to the government. It's a fucking brutal check. Imagine having 50% of your total yearly earnings in a bank account you have to give away.
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the 50% is due to 10% California income tax (before I moved away) + 15% self employment tax + high tax bracket.
I'm switching to an S-corp this year.
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That 18-20% is far more than what most people would make in a 100 life times.
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Remember: you are not “giving it away.”
You are buying a ticket that keeps you out of a cage for the next year.
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Before you pay that out, ask a tax accountant about creating your S Corp and amending the 2020 return under the new structure. Pretty sure this will save a significant chunk of that change in your savings. Did something similar myself and recvd a retroactive refund.
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