Is there a good rule of thumb or percentage I should go by? I want to set it aside now rather than be unprepared at tax time! Thanks!
2007-07-31 11:10:04 · 8 answers · asked by Becky M 2 in Business & Finance ➔ Taxes ➔ United States
You should download a copy of the Form 1040-ES package from the IRS website. Use the worksheets to estimate your income and the amount of taxes you will need to pay in.
You must make quarterly estimated tax payments to the IRS and to the state tax authorities if your state levies an income tax. You can't just set the money aside and pay it in at tax time. If you do that, you'll be hit with penalties and interest for underpayment of estimated taxes.
If the total income you listed is taxable you'll have at least $5,370 in self-employment taxes to pay. Your income tax liability will depend upon many variables such as your age, filing status, number of dependents if any, itemized deductions if any, etc. so it's not possible to give an accurate estimate. The worksheets on the Form 1040-ES package will help with figuring that out, however.
2007-07-31 11:21:06 · answer #1 · answered by Bostonian In MO 7 · 3⤊ 0⤋
By taking out your own taxes I assume you mean you will be issued a 1099 in place of a 1099
Steps:
1) Come up with your net income #- If you are filing a schedule C, which you should, deduct every reasonable business expense associated with this income. Mileage (business miles x .485, excluding commuting miles), supplies, etc.- rarely clothing or personal items
2) Determine your tax rate- this part is tough as you didn't indicate what other income you have. Come up with a draft return based upon your 2006 return and look up your net income on the irs.gov tax tables. For state purposes, usually a flat rate makes it easy. For fed, with that amount of income and not much else, you should be safe with 20-25% of the net income from #1.
3) Add your FICA tax! 15.3% of #1 (x 92 % or something, but go conservative and just do the 15%). Note that half of this can be deducted on page one of your 1040 return as employer portion of FICA
4) go to www.irs.gov, print off estimate vouchers and follow the instructions to mail in your quarterly estimates from the above calculations- likely 35-40% of your net income from #1.
2007-07-31 12:49:39 · answer #2 · answered by Jeff 2 · 0⤊ 0⤋
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2016-11-10 20:35:12 · answer #3 · answered by bhupender 4 · 0⤊ 0⤋
Are you married or single, do you have any dependents, will you have any business expenses associated with earning that $135 a day, where do you live and work... without that info, it's impossible to say.
It'll probably be somewhere between 1/4 and 1/3, but could be more or less than that depending on a lot of factors.
2007-07-31 15:07:58 · answer #4 · answered by Judy 7 · 0⤊ 0⤋
If you are paying your own taxes, then you will also be paying self employment taxes. I assume you are being paid 1099 instead of W2. Your tax will be higher because you have to cover social security (both sides) as well as medicare ect.
After your first filing you will file an estamated tax, every quarter. Where you guess what you have to pay.
I pay around 15% every quarter. But I have a ton of write offs. You should plan on around 20-25%
2007-07-31 11:25:34 · answer #5 · answered by financing_loans 6 · 1⤊ 0⤋
If you log on to www.irs.gov and look for the Circular E publication the information is there for Federal taxes. You should be able to logon to a state website and find out what % of income tax your state charges. FICA tax for self-employed would be 15.3 %, as you will have to contribute for yourself and the employer.
2007-07-31 11:16:36 · answer #6 · answered by blue81696 2 · 1⤊ 1⤋
I would totally recommend doing an automatic withdrawal into a savings account. Otherwise, you're bound to wind up short come tax time.
How much you should save depends on how many dependents you have, if you're married, etc. There are a bunch of calculators online that can help you get an estimate- this one looked pretty simple:
http://www.investopedia.com/calculator/USTaxBracket.aspx
Good luck!
2007-07-31 11:15:24 · answer #7 · answered by Anonymous · 1⤊ 1⤋
Just income taxes, or income taxes, Social Security payments, disability payments, etc?
If it's everything, I would go with about 80%. I've found that no matter how much or little I make, it never fluctuates TOO much above or below 80%.
If it's JUST income taxes, I would go with 10-15%
2007-07-31 11:16:46 · answer #8 · answered by David V 6 · 1⤊ 2⤋