Tax Withholdings and SS payments

I can't seem to find anything on the forum in other threads if there is a software program to calculate your quarterly withholdings/payments.

Does anyone know of one? I guess I am afraid of getting caught at the end of the year owing the IRS money and want to start paying some money now. I do not have any idea how to calculate it and was looking for some type of software to guide me.

Thanks for you help.

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The simplest way to calculate is to take your total tax for 2011, divide by four and send in that amount each quarter. Note: This is not the amount due with your return or the amount paid in in 2011 if you received a refund but your actual tax liability.

IRS states that if in any given year you have paid in 'at least' as much as you owed the prior year there will be no penalties.

If you underpay your taxes during the year by I believe it is $500 or less, there is also no penalty.

And if you goof from time to time, with a reasonable explanation of circumstances IRS will not charge the penalties. (I.e. I earned more than I thought I had. or I thought my deductions were going to be higher.)

For more information see the irs.gov website and query for "Estimated Taxes"

Thanks Flash...

My 2011 total tax is not accurate, because I only made $300 in 2011 and with school and kids I only paid like $20 in taxes. LOL. I am not sure what to do.

Thank you.

If you pay quarterly one quarter of your prior yaer tax bill, then you will not have any penalty assessed for underpaying your 2012 taxes when you file in 2013. That's why the formula works. Meanwhile, as your income grows in 2012, set aside a little savings to accumulate what will be due when you file the final return.

Based in MD, near DC
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With a total tax of $20 you have a choice of either paying in $5 in ea of 4 quarterly payments or just letting the chips fall where they may. I would opt for the 'chips fall where they may' approach.

My guess is that if mystery shopping is all you are doing you will not see a tax bill in excess of $500 and therefore would not be subject to any penalties. (And remember, we are not talking here about $500 profit on Schedule C but $500 in taxes due on the overall 1040.) If you have normal withholding done from some other source, you may want to increase that slightly or just not bother.

SecretAgent could also just send a one-time $20 payment off right now and have the tax weight off her shoulders for the remainder of the year. They are happy to have you pay the tax in advance if you desire. :^)

Thank you peoples. (yes I purposely wrote peoples)

I am going to go ahead and pay my bill. I may just pay extra because this year my tax liablity will be more than last.

I just transfer 20% of my shop fees into a dedicated savings account. That way I make interest on it (paltry though it may be) throughout the year, and it's ready when tax time comes. Generally I end up owing less than what's in my account, which is a nice little bonus for me.

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Tax Withholdings and SS payments

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