How Is My Income Taxed?

Send us a Text Message.How Is Your Income Taxed? In this episode of the Small Business Tax Savings Podcast, Mike breaks down the basics of taxation so that listeners can create a roadmap for their own businesses.Mike explains two main types of tax – ordinary income tax and capital gains tax, as well as self-employment taxes and FICA taxation for W2 employees. He covers the different types of income taxes, such as earned income, passive income, and portfolio or investment income.Tune in now as Mike uncovers the complexities of taxation and learn how it can help you become informed on ways to pay the least amount of taxes legally possible![00:25] Understanding How Taxes WorkToday’s episode is, “How Is Your Income Taxed?”There are two main types of tax: ordinary income tax and capital gains taxOrdinary income tax rates depend on factors such as marital status, household status, etc.[01:29] The Difference Between Ordinary Income Tax and Capital Gains Tax RatesOrdinary income tax rates depend on factors such as marital status, household status, etc.Capital gains tax are taxed at preferred rates of 0%, 15%, or 20% compared to the ordinary income tax rateShort-term capital gains, assets held for less than a year, are taxed at an ordinary income tax rateEarned income is taxed at the ordinary income tax rate and self-employment taxes may apply[12:40] The Benefits Of Passive Income and Investment IncomePassive income is not subject to FICA or self-employment taxesPassive losses can only offset passive incomePortfolio or investment income is taxed at ordinary income tax ratesFor assets held for more than one-year, a preferred capital gains tax of 0%, 15%, or 20% depending on the income is applicable [15:38] Closing SegmentMike shares his knowledge in order for listeners to uncover the complexities of taxation and learn how it can help you become informed on ways to pay the least amount of taxes legally possible!Final WordsKey Quotes“I would never advise every business owner to fully understand taxes. That's why we have accountants. That's why, we come in and help clients in certain areas. But having a basic understanding of how tax works is so key to a really painless amount of taxes legally possible. It's important for you as a business owner to have that foundation knowledge.” – Mike Jesowshek, CPA--------Podcast Host: Mike Jesowshek, CPA - Founder and Host of Small Business Tax Savings PodcastJoin Our Tax Minimization Program: https://www.taxsavingspodcast.com/taxIncSight Packages: https://incsight.net/pricing/Book an Initial Consultation: https://app.simplymeet.me/o/incsight/sale-------Podcast Website: https://www.TaxSavingsPodcast.comFacebook Group: https://www.facebook.com/groups/taxsavings/--------To find out more on this topic and many others visit our website at www.TaxSavingsPodcast.com. You can also give us a call at 844-327-9272 or send your questions to us at: Ask@TaxSavingsPodcast.com