Tax Calculation Breakdown

We use the IRS tax code to calculate the correct tax brackets and deductions to get the taxable income.

The following provides a breakdown of the calculations for each field returned by the Taxes endpoint.

Field

Calculation

socialSecurityTax

12.4% of 1099 income

medicareTax

2.9% of 1099 income (with an income threshold)

selfEmploymentTax

socialSecurityTax + medicareTax

federalIncomeTax

federal income tax on 1099 income + selfEmploymentTax

stateIncomeTax

state income tax on 1099 income

totalTax

federalIncomeTax + stateIncomeTax

federalTaxOutstanding

federalIncomeTax - (irsPayments + otherIrsPayments)

stateTaxOutstanding

stateIncomeTax - otherStatePayments

taxTotalOutstanding

federalTaxOutstanding + stateTaxOutstanding

taxBalance

taxTotalOutstanding - (taxWithholdings + otherTaxWithholdings)

otherIrsPayments

tax payments submitted to the IRS outside of Abound

otherStatePayments

tax payments submitted to the state outside of Abound

otherTaxWithholdings

sum of tax withholdings outside of Abound

taxWithholdings

sum of tax withholdings inside Abound

effectiveTaxRate

totalTaxes / 1099Income

marginalTaxRate

tax rate on each marginal dollar of income received

smartTaxRate

(effectiveTaxRate + marginalTaxRate) / 2
(this is a conservative rate for which users can safely withhold on new 1099 income)

irsPayments

sum of IRS taxPayments for an individual in a given year

quarterlyPayments

duplicate of irsPayments (this field will be deprecated)

taxWithholdings

sum of tax withholdings for an individual in a given year

taxWithholdingsPending

sum of tax withholdings that are pending (only applicable for Abound tax withholdings inside Abound)


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