Question

Wife became self-employed in January, file in September?

Forum|Forum|6 years ago
August 18, 2019
1 reply
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Hi all,

My wife just began work as a missionary at January of this year.

Due to my ignorance, I thought she could file her income tax at the end of the year like everyone else.

Should she file her quarterly self employment tax in September because I missed the April and June deadlines?

Should I wait til another date?

Her earnings are pretty small, about $750 per month which she gets as many small monthly donations from individual people— $25, $40, $100, $20, etc.

From January 2019 to the present, she has earned a total of about $6406.

please let me know when to file, thank you so much!!!

Carl11_2

There is a difference between "paying quarterly taxes" and "filing a tax return".

Quarterly taxes are paid to the IRS each quarter. You also have to pay your state quarterly taxes separately if your state taxes personal income. You only "file" your tax return once a year.

Now the IRS has instructions with worksheets for figuring your quarterly taxes at https://www.irs.gov/pub/irs-pdf/f1040es.pdf. But in my 15 plus years being self-employed I don't waste my time with that. Instead, I just send the IRS 20% of my gross business earnings each quarter. Then come tax filing time it all works out in the wash. For 13 of my 15 years I've always got a refund of some of that quarterly tax payment back. In the two years I actually owed a bit more, it was always less than $500.

If you do the worksheets to figure your quarterly taxes, you'll find that it will come to between 19-21% of the gross business income for the quarter. So I don't waste my time with it and just send the IRS 20% each quarter.

Should she file her quarterly self employment tax in September because I missed the April and June deadlines?

Why wait? The longer you wait, the more the underpayment penalties keep adding up. You should be at least the first two quarters immediately, if not sooner. You can do so "right now" at http://www.irs.gov/payments. Make sure you print the receipt when done and file it with the business records so you'll have it at tax filing time.

From January 2019 to the present, she has earned a total of about $6406.

So I would go ahead and send the IRS 20% of that ASAP, which comes to $1,281. In fact, I'd go ahead and pay $1,400 and consider myself "good" for the third quarter too. If you do that, then when paying on line make "sure" you designate it's a 2019 1040-ES payment for the "THIRD" quarter. Do not bother trying to split things and reporting an amount for each quarter separately. Just pay the total amount due "today" as a third quarter payment. Spliting it up will make absolutely no difference in any late payment penalties if (and only if) any such penalties are assessed. Due to the low amount of business income, there most likely wont' be any penalties assessed. But that depends on the amount of taxes paid through other means, such as your W-2 withholdings each pay period.

M

mspeterson36Author

Thanks a million!!!

I appreciate the thorough reply!

I’ll get right on that now!

🙂

-Matt

M

mspeterson36Author

Would you be so kind as to answer another question?

Another of my wife’s coworkers also began work as a missionary, and he did not begin receiving monthly donations (earnings technically,) until the very end of July.

Now in his case, should he BEGIN his estimated quarterly payments starting in September, even though this is considered the “Third Quarterly Payment”? His donations from about July 30th to date are $1100.

Thank you again for any help you can offer!

He, and my wife were initially advised to just wait until the end of the year to file and pay all the taxes at once, since they wouldn’t be able to predict how much they would earn from donations month to month.