I understand I have to pay taxes in advance quarterly. Oct 1st is the next time. I don't know the total % to pay for medicare, social security or other taxes that I have to cover as a consultant. Does anyone have estimate? I am single. Started earning income this month.
2007-09-04 08:51:16 · 5 answers · asked by Lockhart3 1 in Business & Finance ➔ Taxes ➔ United States
I already tried contact IRS. They had me on phone for 45 minutes and I couldn't continue to hold. Their website is so cumbersome, I can't locate the answer.
2007-09-04 09:02:43 · update #1
With doing consulting you are self-employed, and the income and expenses will be needed to be reported on a schedule C as part of your 1040. In addition to the regular income tax (which will be at your regular tax rate), you will need to pay self-employment (SE) tax, which will be 15.3% of 92.35% of your net self-employment income. If your earned income exceeds $97,500 for 2007 the SE tax rate will change from 15.3% to 2.9% for the amount above the $97,500.
Quarterly estimates are due 4/15, 6/15, 9/15 and 1/15 of the following year. The IRS says that because a self-employed person does not know how much they are going to make in any year until after that year is over, they let you pay either 100% (110% if high income earner) of the previous year tax, or 90% of the current year tax. I have attached a link regarding information for estimates.
At least Texas doesn't have a state income tax, so you don't have to worry about state taxes as well as federal taxes.
2007-09-04 09:09:08 · answer #1 · answered by Anonymous · 1⤊ 0⤋
You don't give enough info for anyone to estimate your tax bracket. You need to send in around 15% of your net income for social security and medicare, plus whatever your income tax is expected to be. 30-45% of your net total will probably do it.
By the way, the due date is 9/17, not Oct 1
2007-09-04 16:32:17 · answer #2 · answered by Judy 7 · 1⤊ 0⤋
Your income as a consultant is self-employed income. On your net income from self-employment (income minus expenses), you will pay self-employment tax @15.3%.
Then you have Federal income tax. If you are Single and no one claims you dependent, then your deduction is $8,750 plus half of your self employment tax. That is if your SE tax for year 2007 are $2000, then you (assuming status Single) don't pay Federal tax for income up to $9,750. Then for next income up to $7,825 the tax slab is 10%.
So you can easily arrive at a rough figure of your tax liabilty. Then the estimated tax rules:
1. No need to pay estimated tax if the tax liability is up to $1,000.
2. Pay estimated taxes so that you pay 100% of your taxes for the year 2006. This is zero if you did not have income in 2006.
2007-09-04 16:09:20 · answer #3 · answered by MukatA 6 · 0⤊ 0⤋
Go to the irs.gov website. There is a lot of info there along with calculators to determine withholding amounts.
2007-09-04 15:59:03 · answer #4 · answered by LIGirl 3 · 0⤊ 0⤋
You can figure it on Form 1040-ES. My overall shoot-from-the-hip estimate would be 30% overall
2007-09-04 16:49:33 · answer #5 · answered by Anonymous · 0⤊ 0⤋