I'm trying to get a better handle on self employment taxes and how they work. Let's say if after deductions you have a taxable income of $75,000. So, if you are single, then the first $9,950 is taxed at 10%, then $9,951-$40,525 is 12% and $40,526-$75,000 is at 22%? So total fed tax is like $12,248.16? Do the brackets include social security on their own or is that separate? If this bracket case is correct, then what cases would you need a large tax write off at the end of the year? For some reason I used to think it was to drop a bracket because I thought that each bracket had to pay that percent on all income, so like $75K taxable would all be counted at 22% so you would owe $16,500 in taxes or if you were closer to the bracket, say $50,000 taxable, then you could spend $10,000 on applicable writeoffs to drop to the 12% bracket and stay out of the 22% bracket.
Anyone have a good grip on how all of this works?