Quarterly taxes penalty for the self employed.

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I found this article interesting. I've never considered having to pay quarterly taxes.

Edited 1 time(s). Last edit at 08/16/2017 10:27AM by LeslieKay111.

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Quarterly taxes are not just for the self employed. They are for anyone who has significant income of any source that is not taxed up front.

I pay quarterly taxes in my main business, so that's never been a worry. If you have conventional income outside of MSing, I'm guessing the MS income would fall outside of any quarterly payment requirements, as your paycheck deductions count as payments.

I can assure that when it's time to make quarterly payments, the IRS will let you know! They are not subtle about it....

The IRS will definitely let you know -- but after the fact, through penalties and interest!!!

Actually, they sent me a letter in advance, asking for quarterly payments so there would not be a penalty. They even included payment vouchers and 4 envelopes!

It's my understanding that the penalty is waved the first year you hit the threshold, then you are responsible from that point on if they are owed.

Steve is correct. The IRS does not just slam you the first time that you owe enough to trigger the quarterly payment requirement. There is a set of 3 or 4 rules for avoiding the penalty and interest. One of those is that this was the first year that you met the threshold for having to pay quarterly. It is a user friendly part of the system and the tax laws. Having to pay quarterly is NOT a penalty for being self-employed. It means that you run a business and businesses must make quarterly IRS payment of their share or the employee's withheld share of the various taxes owed by their employees. YOU are your employee. So, you need to withhold and pay in quarterly, like any other employer.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

@SteveSoCal wrote:

Actually, they sent me a letter in advance, asking for quarterly payments so there would not be a penalty. They even included payment vouchers and 4 envelopes!

It's my understanding that the penalty is waved the first year you hit the threshold, then you are responsible from that point on if they are owed.

It is possible things have changed but I pay quarterly taxes and have been for a long time. I have never ever been notified by the IRS to pay my quarterlies except by way of the penalty the following year. We are all expected to know about this. My tax guy gives me the vouchers every year. He is not the IRS. Some agencies such as Social Security have an option to have taxes withheld. Most investment earnings do not take taxes out but like mystery shopping and babysitting and working for (cash) tips you are still expected to pay taxes on the earnings quarterly.

@sandyf, Not sure if they still do it, bit it was the mid-90's when I starting having to pay. They sent a nice note that said I hit the threshold, and was expected to pay quarterly from that point on.

I also forgot to claim one of my many 1099's a few years ago and they sent another nice note, telling me I had probably missed one by mistake. They proactively recalculated my tax based on the missed form (it was a small additional amount) and let me know there was no penalty due if I paid within 30 days.

I have heard many scary tales about the IRS but my personal experience with them has always been really positive.....

I think the limit is $1000. IOW, if you owe $1000 and haven't made quarterly payments, you get socked with penalties. For most of us, we'll have enough deductions that this won't be an issue. Just keep track of your mileage, especially.

"Let me offer you my definition of social justice: I keep what I earn and you keep what you earn. Do you disagree? Well then tell me how much of what I earn belongs to you - and why?” ~Walter Williams

Thank you, everyone, for the feedback!

I am retired and have to pay quarterly taxes bases on my last years income. I believe that the Accountant has taken into account the amount of money I get from all my 1099's.
I just grin and bear it and my feelings is that if I have to pay the taxes, it is because my income is high enough to warrant it.,

I didn't even think about paying quarterly taxes until I came across this blog. I just started mystery shopping and completely forgot that it IS a legit stream of income. Also, seeing that my tax bracket changed, really opened my eyes. [www.libertytax.com]

Good points indeed, Kwill.

Based in MD, near DC
Shopping from the Carolinas to New York
Have video cam; will travel

Poor customer service? Don't get mad; get video.

@kwill097 wrote:

I didn't even think about paying quarterly taxes until I came across this blog. I just started mystery shopping and completely forgot that it IS a legit stream of income. Also, seeing that my tax bracket changed, really opened my eyes. [www.libertytax.com]

Ditto

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Quarterly taxes penalty for the self employed.

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