Does anyone know how to pay estimated quarterly taxes??

[AllyandJack]

There is a reason I'm not a tax attorney. There is a reason I failed the NH Bar by one essay question - the essay on taxation. I don't understand it. I've come to accept this fact about myself.

Well...DH's company has shut down and he's self-employed for right now. I hope this changes soon, but for at least the next 2-4 weeks, he'll continue to be self-employed. I've sort of figured out our tax bracket. I took that amount out, plus the 5% MA income tax and set it aside in a savings account.

Now, I have no idea what to do with it! I've visited the IRS website and I just don't understand it. I just want to know what form to use for both state and federal. When to send it in. Where to send it. Also...if I've over-estimated (which I've tried to do to avoid under paying), do I get that back when I file next year??

I have no idea how it works. So...we get our W-2s from our jobs and a 1099, right? We take it to H&R Block like normal and do a Married, Filing Jointly, right? How to we prove what we've paid out of the 1099 income? Does it all get lumped together - i.e. one annual income and one sum of taxes paid with our deductions taken into consideration and then a total amount to be refunded (or, in a really bad case, owed)?

Help!!!

 

[jrydberg]

Federal - http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Payment vouchers for each quarter are at the end of that document.

You won't get a W2 for self-employed, just 1099. When you fill out your annual tax return, you'll fill out a Schedule C form declaring profit/loss from the self-employed business. Deductions for business expenses will be in there.

If you overpaid in estimated tax payments, you will get a refund when you file your annual return.

Hope this clears it up somewhat.

 

[SpecialK]

***Just reread your post - completely flew by the self-employed info. so I'm deleting my original post. Won't apply to your situation. Good luck.

 

[RKC]

Disclaimer; I AM NOT A TAX ATTORNEY, OR IN ANY WAY AN EXPERT ON THIS SUBJECT!!!!!!

This is only what we personally do....... My DH owns his own business, and every year they send us those little slips to pay est. taxes. We don't pay them. We put money into a savings account and then send the exact amount owed for the full year when we file our return.........there can be a small penalty for doing it this way (@ 1%?), but if you use a savings account that pays interest you could get a return on your money.....plus by paying only the actual amount owed you don't give Uncle Sam free use of your money and you don't have to wait for a refund.

Again, please see disclaimer at top of post!!!!!!!!!!!!!!!!!!!

-Rachael

 

[tar heel]

If he is only going to be self-employed for a few weeks, you may be able to avoid quarterly taxes AND any possibility of a penalty. If the withholding will equal 90% of the taxes owed for this year or 100% of what you owed last year, there's no penalty even if he makes a boatload of $ self-employed and you owe a lot on April 15.

If you don't meet either of the criteria above, your DH could have extra withheld (to equal 100% or last year's taxes or 90% of what you owe this year) for the rest of the year after he gets a regular job again.

I have some self employment income from freelance work. I used to do estimated taxes but haven't in several years. If I've had an exceptionally good year, I'll raise the amount being withheld at my regular job the last couple months of the year.

 

[AllyandJack]

I think I understand SOME of what everyone is saying.....

I looked at the information jrydberg posted and I'm going to print that out and see if it makes any sense. At least I'll have a voucher and an address and that's more than I had before!

I've contemplated not paying the taxes. We usually get back about $6,000 since we get withheld at the higher single rate and we have a large amount of deductions. Chances are we wouldn't owe, we would just get less back. It's probably easier, especially since this is so short term.

I decided to call my mother who has an accountant friend do her taxes for $30. or something small like that. She said to give him a call and he would meet with us since it's a slow season. It might be worth the money to figure out what the best course of action is.

We tried using his old pay stubs since he's getting paid the same, but his old pay stubs have 20% taken off the top, and $100. for health insurance, so the tax rate is lower and wouldn't give an accurate amount.

I've considered taking that H&R Block tax course now so I don't feel so helpless!!

 

[mudnuri]

Here's an idea- contact an accountant!

now for a similar disclaimer to the above...
B]in no way am I saying this is what you should do, i am not a qualified tax accountant, nor do I pretend to be in a different life.....however, this is what we do[/B]


DH owns his own business- always has, and this is one area that we NEVER deal in. Our accountant handles everything that has to do with taxes, and payroll etc.

DH does not 'pay' himself, he takes an ownersw "draw", which means he does not have any taxes taken. At the end of the year, we normally show a loss, and he doesnt have to pay anything in. Our accountant, and our payroll company handle the payroll tax of our employee's, who at the end of the year get a W-2. It is taken from our bank account quarterly, automatically from the IRS...

We also do not pay quarterly, we wait until we file and then either send in the $$ then, or don't, I think in the last 10 years, we've paid in 2 times.

Brandy

 

[tar heel]

Read my post!

If you're getting that big of a refund, then there's a real good chance he'll still have 100% of what you owed last year withheld. I would not even consider doing quarterly payments unless his self employment turns out to be for much longer than you anticipate.