Since we focus on maximizing the tax benefits of being in business for yourself, we gather some information about your tax situation to make sure deductr is making reasonable estimates for you. Federal tax rates are based on your income level. The rate of tax you pay on your next dollar earned is dependent upon which tax bracket you are in.
Federal tax rates are the same for everyone, but most states have their own income tax rates that are all different. This is in addition to the federal income tax. Depending on what state you live in, deductr applies a combined estimated rate for federal and state.
In trying to keep everything as SIMPLE as possible, the state tax rate given is an AVERAGE flat rate someone in the state would normally pay. The state tax rate reflected in the customer’s Business Setup corresponds with the state they entered under their personal information when signing up for the account. The address can always be changed by the user under the Settings section in deductr.
Side note: When filing taxes, some things are Itemized Deductions and some are Standard Deductions. Itemized Deductions are listed in your Schedule A and include mortgage interest, real estate taxes and tithing given to a church establishment. If you have a lot of these, then your Itemized Deductions can be more than the set Standard Deduction established by the government.
Consult your tax professional to see if this fits your circumstances. This is not to be taken as tax advice. Please refer to our End User License Agreement.