Are you withholding taxes at any source? Does your Form 1099- NEC show Federal income tax withheld? I your income is rising you may be falling under a safe harbor where your tax withheld exceeds the prior year tax liability.If none of the above is true, are you seeing an underpayment penalty on your tax return each year?If you have been incurring an underpayment penalty, I recommend the following cook book: Set a time each month for your "Board Meeting"For example, third Sunday of the month 4 PM to 5:30 PMKeep track of your revenue and expenses in a file folderThe major miss for self-employed taxpayers is failure to track expensesAt the end of each month, total up your profitYou will owe 15.3% self employment tax on the profitYou will also owe income tax on the profit, most likely at your Marginal Tax RateYou can locate your Marginal Tax Rate at the bottom of your 2022 Tax History Report in TurboTaxSo if you are in a 12% marginal tax bracket, you add 12% plus 15.3% and deposit 27.3% of your profit in accordance with IRS "When to Pay Estimated Tax": January 1 through March 31 period, make deposit on April 15 April 1 through May 31 period, make deposit June 15 June 1 through August 31, make deposit September 15 September 1 through December 31, make deposit January 15

Question

Im self employed as an independent consultant with a Direct Sales company. I've been doing this for 7 yrs and never filed quarterly taxes. Should I be? I usually just do everything in April.

Forum|Forum|2 years ago
August 30, 2023
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Ask the Experts - Self-Employed - Aug 2023

R

RSUMan

Are you withholding taxes at any source?

Does your Form 1099- NEC show Federal income tax withheld?

I your income is rising you may be falling under a safe harbor where your tax withheld exceeds the prior year tax liability.

If none of the above is true, are you seeing an underpayment penalty on your tax return each year?

If you have been incurring an underpayment penalty, I recommend the following cook book:

Set a time each month for your "Board Meeting"
For example, third Sunday of the month 4 PM to 5:30 PM
Keep track of your revenue and expenses in a file folder
The major miss for self-employed taxpayers is failure to track expenses
At the end of each month, total up your profit
You will owe 15.3% self employment tax on the profit
You will also owe income tax on the profit, most likely at your Marginal Tax Rate
You can locate your Marginal Tax Rate at the bottom of your 2022 Tax History Report in TurboTax
So if you are in a 12% marginal tax bracket, you add 12% plus 15.3% and deposit 27.3% of your profit in accordance with IRS "When to Pay Estimated Tax":

January 1 through March 31 period, make deposit on April 15

April 1 through May 31 period, make deposit June 15

June 1 through August 31, make deposit September 15

September 1 through December 31, make deposit January 15

Q

quorumof1

Hi There

The amount of estimated tax penalty is usually the deciding factor as to whether or not to make estimated tax payments. For some a $50 penalty might not be worth the paperwork. For others, it certainly would not be. Everyone has a different penalty tolerance. The only incentive to file and pay estimated taxes is to avoid the penalty.

O

Opus 17

The law requires you to make quarterly estimated payments, and there can be penalties and interest if you don't make the payments on time. You don't "file" a separate quarterly tax return, you just make a payment. There is a worksheet you can use to figure out the estimated payment you owe, and it looks like a tax return in some ways, but you don't actually file it. All you have to do is make the payments on time. And these days, there are program like Quickbooks to help you estimate the correct payment amount.

You only file one tax return at the end of the year. If your estimated payments are more than you owe, you get a refund. If your estimated payments are less than your tax, you will owe an additional amount when you file.

If you have been making payments, that's all you need to do. If you have not been making payments, there can be penalties when you file your tax return, even if you pay in full when you file.