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We hear a lot about income taxes, but a majority of people concept just the amount income-related taxes they're paying off. We're taxed by both our federal government and our state. Since the federal government takes the lion's share, I'll specialise in its tax.
Now we calculate if there is any taxes due. Assuming for at the time that not one other income exists, we calculate taxable income using the cash in on the business ($20,000) and subtract standard model deduction (which is $5,950 for 2012) less the exemption deduction (which is $3,800 for 2012). The taxable income would then be $20,000 - $5,950 - $3,800 which equals $10,250. Based on tax law the extra cash tax due for duty would be $1,099. So, the total tax bill for this taxpayer could well be $1,099 + $3,060 for their total of $4,159.
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