Many people start considering their tax obligations as the year draws to a close. How much can you make in 2021 before you have to pay taxes is one of the most often asked topics. Your filing status, income, and deductions are just a few of the variables that will affect the answer to this inquiry. This article will explore this query as well as others that are relevant.
Your filing status will determine how much money you can make before paying taxes. If you are a single filer and under 65, you can make up to $12,550 before paying any federal income tax for the tax year 2021. The threshold is $25,100 for married couples filing jointly and $18,800 for heads of household. The threshold rises to $14,250 for single taxpayers and $27,000 for married couples filing jointly if you are over 65.
Self-employment taxes, which include Social Security and Medicare taxes, may be due if you work for yourself. On the first $142,800 in net income, the self-employment tax rate for 2021 is 15.3%. However, as an adjustment to income, you are permitted to deduct half of this sum.
You might need to apply for an Employer Identification Number (EIN) if you conduct business in Maine. An EIN is a distinct nine-digit number that serves as your company’s tax identification number. Applying for an EIN on the IRS website is free and available for residents of Maine.
You must be aware of your state’s tax rate in order to calculate sales tax. The sales tax in Maine is 5.5%, however certain municipalities may tack on an extra fee. Simply multiply the item’s cost by the applicable tax rate to determine the sales tax due.
You could have to pay taxes on the profits you make from reselling goods. State laws on this, however, differ from one another. You are exempt from collecting sales tax and paying income tax in Maine if you are reselling goods that you originally bought for personal use. However, you might need to get a sales tax permit, collect, and return sales tax if you’re buying and selling things with the goal of making a profit.
Finally, since there is no grocery tax in Maine, food purchases made for domestic consumption are exempt from paying sales tax. However, the 5.5% sales tax applies to cooked meals, confectionery, soft drinks, and other non-essential items.
In conclusion, a number of variables, such as your filing status and income, will affect how much you can make in 2021 before you start owing taxes. If you work for yourself, you might have to pay self-employment taxes, and if you operate a business in Maine, you might have to get an EIN. Knowing your state’s tax rate is necessary to calculate sales tax, and you might have to collect and submit sales tax if you sell products again. The absence of a grocery tax in Maine is the final positive development for shoppers.