How Much I Pay in Taxes on a $45,000 Per Month Income

So How much taxes do I pay on a 45k per month income? The answer is 0, lol jk its a lot of money on taxes and if you don’t pay it you go jail.

1. Federal Taxes
– Every single person that earns money on the books will pay this tax
– This money goes towards military defense, disabilities, food stamps, health program, and more
– Which are very important

Here is how much I pay:
– If you go the IRS website you will see a tax bracket for 2020 telling you how much you’ll pay in Federal Taxes
– In my case: I’m projected to make 319k this year from youtube and 60k from my other business but let’s just use youtube number
– But only the money above 207k gets taxed at 35% while the rest gets taxed at 32% and so on and so on
Math:
– The marginal tax rate is 35% but the effective tax rate is only 25.89%
– This is because as income increase only the part that increases gets taxed higher
– So my total federal taxed are: $82,574 ( if I got taxed just at 35% it would be $111,650k so I save around 28k)

Obviously: this is not including any salary, deductions, and things we do to save money, which I will talk about late in the video. But the fastest way to get rid of this tax would be to move the cayman islands where they have no taxes. Except for the 5-20% tax on imports, theirs always going to be taxed on something for the benefits of the people.

2. State Income Taxes
– Now the odds are that 86% of you pay this tax and only 14% of you don’t
– Because there are only 7 states out of 50 states that don’t charge income taxes
– And I might be moving to Florida for that same reason
– But state taxes go towards Transportations, corrections, and benefits for public employees and more

I live in New York: so we have a local tax and also a state tax
– Local tax effective rate is 3.74%: $11,930
– State tax effective rate is 6.27%: $20,015
– Total new York taxes: $31,945 a year

Ps: local taxes go towards education and parks and so on.
Obviously though: if I moved to Florida I would save all this money every year. And that’s why I have 1-2 years left in new York.

3. Payroll taxes: Social Security and Medicare (I’m not even including the unemployment insurance)
– Now these are right here are self-explanatory they go towards medicare, social security benefits, and unemployment

Now this is where: I save a lot of money by being an S—Corp and hiring myself
– Social security: 12.4%
– Medicare: 2.9%
– If you are a w2 employee however usually you pay 6.2 SS and 1.45 medicare, the employer pays the other half

Tax Savings:
– If I were just an LLC self-employed person, I would pay that tax on the full 319k net income ( SS $39,556 and medicare would be $9,251)
– Which is enough money to get you mad
– But because I’m an s-CORP an I hire myself and pay myself a wage: I only pay those taxes on the wage I pay myself

Math:
– I pay myself 48k per year to record and edit videos that it
– SO the employee me pay SS 6.2% and Medicare 1.45% = $3,672
– And my business pays the other half $3,672
– But that means I save well over 40k every year

The point is this: hire an accountant with years of experience in what you do, its an investment that will save you a ton of money.

Overall Tax Bill Annually: $121,863 a year not including deductions and so on. That’s 38.2% of the business income. And I can save 31k just by switch states.

4. Capital Gains Tax
– Non I hold for the long term.

5. Property taxes
– I don’t have a house yet :)

6. Ways to save money:
– S corp
– Deductions: business expenses, my accountant, and so on ( some people buy fancy things and justify it with saving money on taxes but usually it’s not a complete offset
– Donations
– Retirement Contributions
– Health Insurance

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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