How do i figure out what i need to take out for my quarterly taxes?

Question

I was recently hired on as an independent contractor and i am in charge of paying all the taxes. How do i go abouts figuring out what i need to take out of each check to pay in quarterly. I don't want to have to pay in at the end of the year.

Answer 1

I would say first take out the 15% FICA and then add 20% for the income tax. Hurts but it's best not to owe too much cuz they can penalize you for not pre-paying 90% of what you owe for the year. Stinkers!

Answer 2

Find a H&R Bock agent even the IRS will help you with this.

The most important thing at this point is to find as many write off's as you can, because as an Independent contractor you now have the oppertunity to take advantage of this.

Things you can write off that I can think of right now.

Everything that has to do with a home office, even the utilities expence per square footage.
Clothing you use for work
mileage on you car during work related use
cell phone if used fo work
1/2 of the cost of your meal if work related, or the cost of hotel exspence if needed for work.

The best thing is to purchase a tax book and you get to write that off aswell. You will learn a lot this away, or go to the library and do some free research.

If you are making a lot of $$$$ invest in an IRA or another type retirement plan, becarefull it's great being self employed, but you have to stay on top.

Best of luck, and I wish I had better information for you.

Answer 3

You must pay estimated tax for 2007 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2007 after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of:
*90% of the tax to be shown on your 2007 tax return, or
*100% of the tax shown on your 2006 tax return. (110% if your AGI is more than $150,000 or $75,000 for married filing separately). Your 2006 tax return must cover all 12 months.

4. So if you pay minimum amount (including withholdings) equal to 100% of your 2006 tax return, then you are safe.

5. You do not have to pay estimated tax for 2007 if you meet all three of the following conditions.
*You had no tax liability for 2006.
*You were a U.S. citizen or resident for the whole year.
*Your 2006 tax year covered a 12-month period.

6. For 2008 also, divide your taxes for 2007 by four and send quarterly payment equal to that amount on/before April 15, June 15, Sept 15, and Jan 15.

Answer 4

It depends on your total income. You'll pay around 14% of your net contractor income for self-employment tax (social security and medicare), plus whatever income tax is due. Without knowing your total income, and your personal situation like marital status, any dependents, there's no way to give you an answer on the income tax. Remember you might also owe state income tax, and need to file quarterly with the state also.

Answer 5

Every Quarter take your best estimate and go a bit over..you will get a refund of any overpayment. better safe than sorry.
Don't forget the last quarter ends Jan 15th of 2008. Also you will be taxed a Self Employment tax so prepare your expenses. The great part is you are only taxed on the NET!!
The biggest deductions are if you use your automobile for more than commuting log every mile it can deduct thousands,
cell phones, tools, anything you spend out of your pocket. Still pay on the gross...and enjoy your refund.

Answer 6

Call the IRS and they'll send you what you need.