2018 Wage/Self-Employment/Dividend/Investment Tax Calculator (Also Solves for S Corp Optimum Dividend/Salary)

2018tax.php

<?php
/**
 * @author AbiusX <[email protected]>
 * @version 1.0
 */

/**
 * Calculate taxes based on salary, self-employment salary,
 * dividends and capital gains. Especially useful for S Corps
 *
 * @param float $salary
 * @param float $self_salary
 * @param float $dividend
 * @param float $capital_gain
 * @param string $state
 * @return array tax breakdown
 */
function calculate_tax($salary,$self_salary,$dividend,$capital_gain,$state="VA")
{
    // all numbers are filing jointly for 2018
    $federal_standard_deduction=12000*2;
    $income_brackets=[
        19050=>10,
        77200=>12,
        165000=>22,
        315000=>24,
        400000=>32,
        600000=>35,
        PHP_INT_MAX=>37,
    ];
    #TODO: add other states
    $state_standard_deduction=["VA"=>3000*2];
    $state_brackets=["VA"=>[
        3000=>2,
        5000=>3,
        17000=>5,
        PHP_INT_MAX=>5.75
    ],];
    if (!isset($state_brackets[$state]))
        throw new Exception("Don't have brakcet info for state :(");

    $capital_gain_brackets=[
        77200=>0,
        479000=>15,
        PHP_INT_MAX=>20,
    ];
    $fica_ss_brackets=[
        128400=>6.2,
        PHP_INT_MAX=>0,
    ];
    $fica_medicair_brackets=[
        250000=>1.45,
        PHP_INT_MAX=>1.45+.9,
    ];

    $total=$salary+$self_salary+$dividend+$capital_gain;
    $tax=[];
    
    // Income (salary) tax
    $income=$salary;
    $taxable_income=$income-$federal_standard_deduction;
    if ($income)
    {
        $tax["taxable_income"]=$taxable_income;
        // +Federal
        $tax["federal_income"] = do_the_tax($income_brackets,$taxable_income);
        $tax["fica_ss"] = do_the_tax($fica_ss_brackets,$income);
        $tax["fica_medicair"] = do_the_tax($fica_medicair_brackets,$income);
        $tax["fica"] = $tax["fica_medicair"]+$tax["fica_ss"];
        $tax["federal_rate"] = $tax["federal_income"]/$income*100.0;
        // +State
        $taxable_income= $income - $state_standard_deduction[$state];
        $tax["state_income"] = do_the_tax($state_brackets[$state],$taxable_income);
        $tax["state_rate"] = $tax["state_income"]/$income*100.0;

        $tax["income_total"] = $tax["state_income"] + $tax["federal_income"] + $tax["fica"];
    }


    // Capital gains (e.g., qualified dividend) tax
    if ($capital_gain)
        $tax["capital_gain"] = do_the_tax($capital_gain_brackets,$capital_gain);
    
    // Self income tax
    $income=$self_salary;
    $taxable_income=$income-$federal_standard_deduction;
    if ($income)
    {
        $tax["self_taxable_income"]=$taxable_income;
        // +Federal
        $tax["self_federal_income"] = do_the_tax($income_brackets,$taxable_income);
        $tax["self_fica_ss"] = do_the_tax($fica_ss_brackets,$income)*2;
        $tax["self_fica_medicair"] = do_the_tax($fica_medicair_brackets,$income)*2;
        $tax["self_fica"] = $tax["self_fica_medicair"]+$tax["self_fica_ss"];
        $tax["self_federal_rate"] = $tax["self_federal_income"]/$income*100.0;
        
        // +State
        $taxable_income= $income - $state_standard_deduction[$state];
        $tax["self_state_income"] = do_the_tax($state_brackets[$state],$taxable_income);
        $tax["self_state_rate"] = $tax["self_state_income"]/$income*100.0;

        $tax["self_total"] = $tax["self_state_income"] + $tax["self_federal_income"] + $tax["self_fica"];
    }

    // Dividend (counts as self-income, but no double FICA)
    $income=$dividend;
    $taxable_income=$income; // No deduction on dividends
    if ($income)
    {
        // +Federal
        $tax["dividend_federal"] = do_the_tax($income_brackets,$taxable_income);
        $tax["dividend_federal_rate"] = $tax["dividend_federal"]/$income*100.0;
        $tax["dividend_fica_medicair"] = do_the_tax($fica_medicair_brackets,$taxable_income);
        $tax["dividend_fica_ss"] = do_the_tax($fica_ss_brackets,$income);
        $tax["dividend_fica"] = $tax["dividend_fica_medicair"]+$tax["dividend_fica_ss"];
        
        // +State
        $taxable_income= $income;
        $tax["dividend_state"] = do_the_tax($state_brackets[$state],$taxable_income);
        $tax["dividend_state_rate"] = $tax["dividend_state"]/$income*100.0;
        
        $tax["dividend_total"] = $tax["dividend_federal"] + $tax["dividend_fica"] + $tax["dividend_state"];

    }

    $tax["total_tax"]=@$tax["income_total"]+@$tax["self_total"]+ @$tax["capital_gain"] + @$tax["dividend_total"];

    $tax["total_after_tax"]=$total-$tax["total_tax"];
    $tax["total"]=$total;
    $tax["ETR"]=sprintf("%.2f",$tax["total_tax"]/$total*100.0);
    return $tax;
}
function do_the_tax($bracket,$amount,$details=false)
{
    $tax=0;
    $previous_dollar=0;
    foreach ($bracket as $dollar=>$percent)
    {
        if ($amount<$previous_dollar) break;
        if ($amount>$dollar)
            $effective=$dollar;
        else
            $effective=$amount;
        
        $t=($effective-$previous_dollar)*$percent/100.0;
        # Tax Bracket Details:
        if ($details)
            echo "{$percent}% for \$", number_format($effective), " - \$", number_format($previous_dollar),
                " (\$", number_format($effective-$previous_dollar,2).") = \$", number_format($t),PHP_EOL;
        $tax+=$t;
        $previous_dollar=$dollar;
    }
    if ($details)
        echo PHP_EOL;
    return $tax;
}

/**
 * Given a dollar value,
 * calculates the optimum salary to be paid by the S corp,
 * to minimize taxes.
 *
 * @param float $total_money
 * @return int
 */
function find_optimum_s_corp_salary($total_money)
{
    $min=PHP_INT_MAX;
    $minn=0;
    $step=100;
    for ($i=0;$i<$total_money;$i+=$step)
    {
        $self_salary=$i;
        $dividend=$total_money-$i;
        $r=calculate_tax(@$salary,$self_salary,$dividend,@$capital_gain);
        if ($r["total_tax"]<$min)
        {
            $min=$r["total_tax"];
            $minn=$i;
        }
    }
    return $minn;
}
$salary=$dividend=$self_salary=$capital_gain=0;

$total=120*1000; // The total income
$optimum=find_optimum_s_corp_salary($total);

echo "The optimum salary to be paid is \$",number_format($optimum),PHP_EOL;
$self_salary=$optimum;
$dividend=$total-$self_salary;
echo "That makes dividends \$",number_format($dividend),PHP_EOL;

// Tax breakdown
$r=calculate_tax(@$salary,$self_salary,$dividend,@$capital_gain);
print_r($r);