Paying taxes on the profits from a flip project...

[Tony Duong]

I’m curious how others approach paying taxes after selling a flip project...

1. Do you pay your taxes to the IRS immediately after acquiring the check from closing? Or, do you put enough aside and pay at the end of the quarter/year?

2. I know that profits from a flip are considered ordinary income and taxed at your tax rate based off your AGI, however do you include your state taxes when you send it in as well?

A simple hypothetical example (please correct me if I’m making any assumption mistakes) based off easy math:

Gross Profit = 50,000

Fed. Tax Rate = 22%

State Income Tax Rate = 7.2%

Self Employment tax = 15.3%

Total taxes to be paid:

Federal = $50,000 x .22 = $11,000

State = $50,000 x .072 = $3,600

S.E. Tax = $50,000 x .153 = $7,650

Total Taxes = $22,250

NET PROFIT = $27,750

— Am I doing this correctly and making the correct assumptions?

Thank you everyone in advance for your help!! Tax saving strategies are welcome as well!