Independent Contractor tax question

Are Independent Contractors required to pay quarterly estimated tax payments. Even though I have no business name. Just use my own name.

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The requirement to pay quarterly estimated taxes applies to every taxpayer. There are several tests. The easiest one is whether you expect to owe over $1000 in Federal taxes. If you do, you should pay quarterly estimated taxes to bring down the April 2020 liability for Tax Year 2019 to under $1000. If you end up owing more than $1000, you are likely to also owe penalties and interest to the IRS. If you had $500,000 in the bank earning 1% interest, you would earn $5000. If y9u are in the 25% tax bracket, you would owe $1250 in taxes. You should have made quarterly estimated payments. It doesn't matter where the money came from (interest, dividends, salary, mystery shopping), it is the amount of money earned and the tx liability that matters.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

What if your income is less than $15000. Do you still have to pay the quarterly tax? I'm single, over 65.

If your income is less than $15,000, my rough calculation says that you owe about $280 in income tax. Don't rely on exactly that number, but even if I am 100% off, you would only owe $560. $560 is less than $1000. No need for quarterly estimated payments.

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

So who do I send these payments to? Is there a form to fill out. I know there's some major changes coming soon to W4s. I found out there's a quarterly payment due April 15. So it's an estimated payment. With all my deductions business expenses, transportation mileage ( a boat load) plus with added payroll tax deductions meant to augment shopper income. It's kind of a crap shoot what quarterly tax liability is. Guess it's best to pay too much than not enough. I'm assuming I will get back any overpayments

Yes, there is a form. My local library currently has it available; you might check your library.

If you have a W-2 job that covers MOST of your tax liability, you don't really need to file quarterly estimated taxes.

Estimated payments are "credited" against taxes due for the year. If you overpay, you get it back. Here is the IRS website which will tell you how to estimate the estimated tax payment and how to send it. [www.irs.gov]

Shopping Southeast Pennsylvania, Delaware above the canal, and South Jersey since 2008

Myst4au—thank you for your insightful comments!! I’ve always kinda wondered on this topic and you’ve relieved my mind.

The link to download free IRS forms is [apps.irs.gov]

Type in 1040, look on page 2, choose payment voucher. The form and address to mail pop up.

I ran all my numbers through the IRS tax calculation
With my Social Security, MS independent contractor about 9,000 and my updated Federal payroll deductions. They estimated I will owe less than $100.00 that's taking the standard deduction of 13800 single next year. My be less if I itemize tons tons mileage and business expenses plus out of pocket medical.

Oh, David, you don't "itemize" mileage -- it goes on Schedule C for self-employment income.

And I don't know anything about out of pocket medical deductions; my knowledge is focused on business taxes, not personal.

David,

The IRS has a safe harbor rule for estimated taxes. Here is the simplest way to avoid obscene penalties. Take last years tax liability and divide it by four. Every quarter send 1/4th to the IRS with form 1040-ES.

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Independent Contractor tax question

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