Yahoo Answers is shutting down on May 4th, 2021 (Eastern Time) and the Yahoo Answers website is now in read-only mode. There will be no changes to other Yahoo properties or services, or your Yahoo account. You can find more information about the Yahoo Answers shutdown and how to download your data on this help page.
Trending News
I started self-employment this past January. Do I need to pay quarterly taxes?
I'm paid a flat $200/wk or $10,400/yr. The company I'm contracting for is a growing business so it is possible that my pay could increase some later this year...not guaranteed. ..and I have no employees or anyone I outsource work to. I'm a single filer with one dependent (my younger sister...mentally retarded from birth).
I filled out the estimated tax worksheet...1040-ES. ..so here I am looking at this sheet and the final outcome is "Stop. You are not required to pay estimated taxes." Sounds good. BUT...I'm self employed! I've heard from so many people that ALL self-employed people are required to pay quarterly taxes or face VERY heavy penalties, fees, and possibly jail. After doing this worksheet it would seem those people are wrong. I don't want to screw things up and end up owing thousands and thousands of dollars in penalties & fees next year. ...and definitely don't want to end up in jail.
I even went as far as plugging this year's earnings on my filed 1040 form just to see what would happen. The results: $1800 refund. Note: I did not overwrite the filed form. All figuring was done on a separate sheet of paper.
Is it possible that some self-employed people don't earn enough to require quarterly payments? ...or should I stop my whining and pay it anyway? I don't really want to pay the quarterly taxes so I can put that money towards paying off high interest debt.
@shipwreck: I know I'll owe the SE tax. What I'm trying to figure out is if I'm required to pay quarterly no matter what the calculations results were of the 1040-ES. As for my sister, she doesn't work and has no income of her own.
5 Answers
- JudyLv 76 years agoFavorite Answer
If you qualify for EIC for your sister, the EIC will more than cover what you owe, so no need to file quarterly.
- StephenWeinsteinLv 76 years ago
First, there is no possible jail for not making the four payments.
Second, it's not accurate to jail them "quarterly", because there is one quarter with two payments and one quarter with zero payments.
Third, the penalty is roughly 6% per year from when the payment was do until you finally do pay. Since the payments are due in April, June, September, and January, and you'll pay when you file your taxes in April, the average payment will be approximately 1/2 year late, you'll be looking at a penalty of approximately 3% of the payment, which isn't really significant. And there is no "fee" either. Just the very low penalty. No heavy penalties, fees, or possible jail.
It is not possible that only "some" self-employed people don't earn enough to require quarterly payments. I'd say it's more like most don't make enough (if you include those who have regular jobs doing something else and just make a few hundred a year in self-employment), or don't have to pay for some other reason.
- troLv 76 years ago
by April 15 if you find that you will owe for self employment and income tax over $1K for the year, yes you need to file quarterly what you expect that 1/4th will be
in fact you need to have paid in at least as much as your previous year's tax was
- shipwreckLv 76 years ago
You will owe self employment tax of 15.3% even if no income tax. You may not be able to claim your sister if she has her own income like SSI since you wouldn't be making enough to pay over half her support.
