I recently started my own consulting job for a company I used to work for. They need extra help and I told them I would. I used my social security number as my tax ID number for my end of year taxes when that comes. Is there anything else I need to fill out as well? The employer will NOT be taking taxes out of my check. I think they said they will send me a 1099 form with everything on it at the end of the year. What is this? also, what would be an appropriate percentage for me to take out of each check and set aside so that I can pay taxes next year on this. Is there anything else I may need to know? Thanks Everyone!
I will be doing all of my taxes myself. How would I go about filing taxes quarterly. I am just used to filing my taxes at the end of the year.
2007-02-08 02:42:03 · 5 answers · asked by Eric M 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
I went that do-it-yourself corporate taxes approach for a while and it is more trouble than it is worth. It consumes a lot of hours to get the forms straight in your mind and a lot more hours to deal with any problems. If the federal or state government misplaces a form or a payment they will eventually get back to you, the tax filer, with a complaint and a demand for a penalty for not filing on time. You can spend a lot of time resending papers and trying to get them to take a reasonable approach to an error they won't admit. And if you ignore them when they send a letter saying that you are missing something (because you know they are wrong) they will eventually get a lien on your business and command your bank to take it out of your account. Then you need to take time to fight with the government and with the bank.
Some banks are now offering very cheap payroll services if you have your business account and your personal ("employee") account with them. They include all the paperwork including collecting the right amount of tax for free and just charge a fee for extras at the end of the tax year.
Your time as a consultant is worth more than the cost of a tax accountant so if you are in that dual role you are wasting time you could be earning.
2007-02-08 02:56:20 · answer #1 · answered by Rich Z 7 · 0⤊ 0⤋
Your quarterly estimates for 2007 are due on April 17, June 15, and September 15, 2007 and January 15, 2008. Your estimates need to pay in either the lesser of 100% of your 2006 tax liability, or 90% of your 2007 tax liability. Assuming that your consultiing work will pay you roughly equally throughout the year, you can figure out what your total income will be for the year, subtract out your self employment expenses, and then figure out what your tax liability is (including self employment tax). Once you have that number, the simplest way is to take 1/4 of at least 90% (it would be better to take 100% so you don't owe at the end of the year) of the tax liability and pay that in each quarter.
If your income is not earned evenly throughout the year, you can figure out your estimate quarter by quarter and use the annualized income method to determine your estimated tax payment requirements.
Get the form instructions for Form 1040-ES for 2007. It has a worksheet that you can use to calculate your estimated tax payments.
2007-02-08 11:00:38 · answer #2 · answered by jseah114 6 · 1⤊ 0⤋
The 1099 is just a notice of how much they paid you and reported to the IRS.
You'll need to make quarterly estimated tax payments using Form 1040ES, not just "set aside" the money for taxes. If you don't make sufficient estimated payments (or have another W2 employer withhold additional taxes to cover the liability) you may be subject to penalties and interest for underpayment of estimated taxes.
You'll have to pay Self Employment taxes of 15.3% on the net profit from the business activity plus Federal and State income taxes. That percentage will depend upon your total income -- anwhere from 15% - 35% for Federal income tax.
So, depending upon your tax bracket, you'll need to set aside and pay in 30% - 50% of your income for taxes.
2007-02-08 11:59:41 · answer #3 · answered by Bostonian In MO 7 · 1⤊ 0⤋
will be doing all of my taxes myself. How would I go about filing taxes quarterly. I am just used to filing my taxes at the end of the year.
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2007-02-10 05:02:51 · answer #4 · answered by Anonymous · 0⤊ 0⤋
You'll have to pay Self Employment taxes of 15.3% on the net profit from the business activity plus Federal and State income taxes. That percentage will depend upon your total income -- anwhere from 15% - 35% for Federal income tax.
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2007-02-10 01:22:44 · answer #5 · answered by Anonymous · 0⤊ 0⤋