Question

Do quarterly payments reduce taxes for 1099-NEC contractors? If so, how and by how much?

Forum|Forum|3 years ago
March 6, 2023
1 reply
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My young son is being paid as a non-employee contractor (1099-NEC). Does making quarterly payments reduce taxes for 1099-NEC contractors? If so, how and by how much? Can you please provide a simple example?

KrisD15

No, quarterly (estimated) tax payment do not reduce the tax liability, but they can eliminate a tax PENALTY.

The IRS expects taxes to be paid as income is earned.

If your son waits to pay his tax at the end of the year when he files his tax return, he could get a penalty for waiting.

Your son wants to make sure the tax he pays as quarterly payments cover at least 90% of his tax liability OR 100% of his tax liability for the previous year.

So when he files this year, if his tax liability is $2,400 he should pay 600 each quarter to avoid an under payment penalty.

Underpayment Penalty

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