Paying Quarterly Taxes?

Question

I work with a wedding consultant who pays me a percentage of every wedding I work, so I never know how much I will be paid. How do I know when and how much I should pay for quarterly taxes?

Answer 1

I love these kind of questions. There are three quarters to a year. (3 months x 4 quarters = 12 months). IRS is their infinite wisdom does not count quarters the way we do. Seeing that we are now in the third quarter of the year, you missed the April 15th estimate (due April 17th) (for earning from 01/01 to 03/31), the next one was June 15th (for income of 04/01-05/31) (count them--two months). estimate. Next one will be September 15th., well actually September 17th (for earnings of 06/01-08/31).


Determine how much you earned through August 31. Deduct all related expenses--ie, mileage, office supplies, cell phone use (work related), any expense necessary to earn this money. IRS knows that it takes money to make money. Depending on your other sources of income, and let say you are in the 15% tax bracket, multiply the net income number by 30%. That will take care of your income tax as well as your self-employment tax. You will probably come up with an odd-ball figure. Round that number up to the nearest $10, $100, $1000 to cover yourself.

Seeing that you probably did not pay for the first two quarters, pay the total on or before Septembr 17th. If you did make some form of payment, calculate your year to date taxes and subtract any payment made so far (or refund from 2006 that your applied to this year) and remit the balance on Form 1040-ES --3rd quarter--get the correct voucher.

That is the easy summation of how to calculate your estimated tax. There are a few other factors where you may not have to pay any estimates, ie, you have a primary job that takes out enough to cover your side job, or you have earned income tax credits available. Good luck to you!

Answer 2

Make an educated guess. You can adjust the amounts with each quarterly payment.

Estimate your annual income and your tax liability. Divide by 4 for the April payment. You can adjust the amount for the June and Sept payments. The January payment will allow you to hit it pretty close (since by then you will know your total income).

Your goal is to pay 90% or more of the tax that will be due. If you go over slightly, you have made a free loan to the government. If you go under too much, the government will charge you for the loan (with a penalty).

Answer 3

Since the quarterly payments are due AFTER the quarter ends, you'd know how much you made that quarter. If you pay in taxes like you'd make 4 times that much for the year, you'll be OK.