Self employment tax questions?

Neither. It's complicated because some of what you reinvest is deducted over many years, not all at once. So you would have to figure out how much is deductible in what year, and then subtract that from the profit for that year.

You are in the clueless bracket and need to consult a tax professional who will deconfuse you.

What you are doing is not how it works. There is no such thing as 'personal expenses' for taking a deduction against business income. In fact, you are supposed to keep personal funds and business funds completely separate.

If you are a corporation, the corporation may pay you a salary as an employee, and that salary would be deductible against business income. As would the corporation's share of payroll tax, federal and state income tax withholdings, and anything the state requires an employer to pay. I'll bet you're not incorporated and doing any of those things.

That means you are a sole proprietor. EVERY PENNY of that 4150k is taxable business income until you can prove to the IRS that some of it is not, the portion you can document as legitimate business expenses. Once you calculate those plus depreciation you are allowed, you arrive at your NET business income. You pay your personal income tax on that. Plus, you will pay the self-employment tax of 15.3% on 92.35% of that net income. What your actual tax bracket will be is anyone's guess.

I suggest you get a professional to do your record keeping and tax work for you.

Money reinvested in your business is not generally tax deductible. If you just put money in the business bank account you get no deduction. If you spend money on business assets such as buying a piece of equipment you'd have to depreciated it - which means spread the expense out over several years. If you actually spend the money on the business for something such as advertising or wages for an employee, then it might actually be deductible.

You'll also owe self employment tax on the net profit

Your tax bracket only identifies the tax rate you pay on the last dollar earned. Being in a higher bracket doesn't mean you pay the higher rate on your entire income, only the portion of income above the cut off for that bracket. So you always have more after-tax income if you can increase your pre-tax income.

Reinvesting the money in the business doesn't make it tax deductible. Actual business expenses are tax deductible, some purchases will have to be depreciated, not deducted. Your bracket is for the net income (revenue minus expenses).

You. Need. An. Accountant. Yesterday.

No, money you reinvest in your business is NOT tax deductible.

HIRE SOMEONE. There is so much in your statement that is wrong.

You can't deduct personal expenses from the business. Your business makes what it makes and then either pays you a salary (if a corporation), a dividend (if an S corp, in addition to the salary), net income (partnership or sole proprietorship).

Reinvesting profits is not automatically a deduction. Inventory cannot be deducted until sold. Capital assets need to be depreciated over time.

If you fail to keep records, the IRS can claim you had $150K of income.

If you set your business up as a separate entity (LLC or other corporation) then your buisness is "paying" you the $35,000 and you'd be in the $35,000 tax bracket.

If you didn't set the business up like that (you should for protection purposes), and you haven't established some other tax designation for your business, then you and your business are the same entity so you're probably in the $150,000 bracket minus your buisness expense deductions.

You may want to see a CPA to get this all cleared up.