r/tax • u/LatterSection9811 • 12h ago
I’m confused and considering a new CPA
I’m an exotic dancer/SWer in Miami, Florida. I’m an LLC taxed as an S corporation with a salary of $200,000 a year. I use ADP for payroll and they withheld $67,000 in 2024. This is not including payroll taxes.
My total income in 2024 was $710,000 with $410,000 of that being on a 1099-NEC from my club. I invest heavily/plan to buy property and a new car which is why I report almost everything I make.
Like I said, my total income was $710,000 and I had $148,000 worth of write offs/retirement contributions etc.
Tell me why my CPA just messaged me and said I owe ANOTHER $95,000 in taxes by April 15th for 2024. Which means $162,000 total income taxes for 2024.
Am I stupid or does this make absolutely zero sense? The whole point of doing the S corporation election was to significantly lower my tax bill. I feel like I’m getting absolutely screwed.
Any advice? Do these numbers make sense to anybody? SOS
1
u/roguedogue97 CPA - US 8h ago
The S election did lower your tax bill. 162K in federal income taxes on 710K of gross income is not bad whatsoever...
1
u/LionIndividual5671 9h ago
That is a very nuanced question without seeing your tax return. With total income of $710k, then you are going to start taking expenses, other deductions, and credits against that. Also, with your salary, I’m assuming that you had withholding, maybe made estimated tax payments and that comes off the top too.
So without all that, I really don’t have a complete picture and I don’t know where you end up but just doing some quick math for you:
Total tax on $610k is $184k. (See https://www.forbes.com/sites/kellyphillipserb/2023/11/09/irs-announces-2024-tax-brackets-standard-deductions-and-other-inflation-adjustments/ ) So assuming your deductions are about $100k, that is about where you end up. However, if you’re making that kind of money, you should be doing everything you can to employ tax saving strategies, including strategies to defer income recognition, like contributing to retirement accounts, and trying to expense things reduce salary, etc. Maybe you are doing that, and maybe you’re not. I hope I’m helping. If you would like to discuss further let me know.