I am a medical transcriptionist working for a company at home as an independent contractor. They do not take taxes out of my check because of this. My "tax guy" told me not to worry about paying taxes quarterly because I am only making about $500 a month (part time job/full time mom) This is making me a little nervous. Any experts out there have any advice? This this something that I can pay when I file my taxes??
2006-09-14 10:41:54 · 6 answers · asked by GeminiGirl 4 in Business & Finance ➔ Taxes ➔ United States
I you are making only $500 a month and this is your only source of income, you should be ok. That is only $6000 a year, and it will pretty much be eaten up by your standard deduction and exemption, not to mention the expenses in your business. Remember that you computer is deductable as a busienss expense. Not to mention any materials you buy for your business, such as paper, CDs, etc.
If you want to do the calculations to be sure, you need to get the form 1040 ES and its instructions. You will definately want to get this if you have other income of any substance.)
2006-09-14 11:53:42 · answer #1 · answered by world traveler 3 · 0⤊ 0⤋
If you (or your spouse if you are married) have income subject to withholding, you can always have more withheld from that source to cover what you would otherwise pay quarterly. If not $500/month will probably not result in enough tax liability for timing of payments to be an issue.
2006-09-14 14:49:00 · answer #2 · answered by STEVEN F 7 · 0⤊ 0⤋
Depends on your filing status. If you are single or head of household, you won't owe any income tax anyway on $6000 income a year. You'll owe self-employment tax of 15.3% on what you make, or around $1000, but that would probably be wiped out by child tax credits, so you'd likely be OK, so that would be correct, you don't have to file estimated. .
If you're married filing joint, then depends on the TOTAL income, taxes owed, and withholding for both spouses, so then maybe you'd need to file estimated or have a spouse withhold extra.
If you're supposed to file quarterly estimated payments but don't, and just pay when you file your taxes for the year, you'll pay a penalty.
2006-09-14 13:19:36 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
Tax laws require you to pay 90% of your current year tax or 100% of the prior years tax in order to avoid penalty. You are only making approx. $6000 from this company if that is your only taxable income you will be ok. If you receive other money that is taxable by the IRS you should probably make estimate payments.
2006-09-14 10:52:37 · answer #4 · answered by ebony_q_t 2 · 0⤊ 0⤋
It sounds like your tax guy knows what he's doing. $6K a year will most likely be absorbed in your Exemption and Standard deduction. Your tax guy knows your situation, so I'd listen to him. If you're still unsure, call and H&R Block office, they'll advise you at no cost.
Good luck!
2006-09-15 02:14:21 · answer #5 · answered by Adios 5 · 0⤊ 0⤋
$500 a month is 6k a year, if you have any deductions to claim your tax should be near nothing, so don't get nervous your guy is right.
2006-09-14 10:55:11 · answer #6 · answered by Anonymous · 0⤊ 0⤋