Schedule SE first time filing?

Question

I will be an independent contractor starting in Oct. Normally if I started Jan 1 I would estimate my salary from Jan 1 08-Dec 31 08 and file my first estimated payment Jan. 15. So what do I do about my earnings from Oct 07-Dec07?

Answer 1

I think you are a little confused on quarterly estimates. If you start your business in October, calculate your earnings from October 1 - December 31 and calculate your taxes based upon that figure. That payment is due on January 15th by using 1040-ES for the 4th quarter. You can avoid paying the fourth quarter estimate by filing a return by January 31st and paying any liability at that time. If you are expecting a refund without an estimate payment, then don't send in an estimate. We certainly don't want to send the IRS an interest free loan.

In the future, income from:
Jan. 1 to Mar 31 is due April 15th-First quarter
April 1-May 31 is due June 15th-Second quarter (Yes, I know, quarters are three months, not two, but IRS doesn't know what a quarter is).
June 1-August 31 is due September 15th-Third quarter
September 1-December 31 is due January 15th-Fourth quarter.

Of course if those dates land on a week-end or holiday, you get until the next business day.

Hope this helps and Good luck on your venture.

Answer 2

Either file an estimated return for the 4th quarter (due 1/15/08) or file your return by then. It's not unusual to file an estimated return for one or more quarters, but not all four.