Thursday, June 25, 2009
A Primer on Estimated Taxes
Ive been working as a therapist since the beginning of this year. I know that I will miss today's quarterly taxes filing deadline because Im not sure how to estimate what I will need to pay and afraid I will not have the funds to pay it until my next paycheck. I dont get taxes taken out of my checks because I am an independent contractor but know that/figure that I need to make quarterly tax payments.
Please let me know if you can provide any assistance in helping me file at some point this week or at the least help me figure out how much I owe.
Your answer is in this post: Estimated Taxes . It starts out this way ...
I am getting lots of questions on estimated taxes, so I thought an overview necessary.
Here 'tis.Federal income tax, Social Security tax and Medicare tax are pay-as-you-go taxes; that is, the tax must be paid as income is earned. Dennis Dubya-two, shipping clerk for Toys 'n' Things, receives a paycheck every week. Each week Toys 'n' Things withholds all applicable taxes from Dennis’ pay and forwards them to various government agencies. At the end of the year Dennis receives a W-2 which shows income earned and taxes paid.
Self-employeds must follow the same pay-as-you-go method as do wage earners like Dennis. As an entrepreneur brings in income he withholds taxes from himself -- that is, he puts money aside -- and then sends his taxes to the government via estimated tax payments.
Not every self-employed has to make estimated tax payments.
It’s the overall tax liability of a self-employed that determines whether estimated tax payments are required. An indie’s total tax liability is made up of ... continue here