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  1. #1
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    Does anybody pays their taxes quarterly? The woman that did my tax papers for 2002 told me that I was supposed to pay quarterly if for that quarter my tax is over $1,000. I just paid for 2002, but should I also have paid for the 1st quarter in April?
    I always believed the execution happens once a year, so I guess I've gotta upgrade my religion

    Beer without vodka is wasted money

  2. #2
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    You are required to pay estimated quarterly taxes if you believe your annual tax liability will be over a certain minimum amount. I do not recall right now what that amount is, but your tax advisor would know.

    If you fail to do so, you can be subject to late payment penalties even if you pay in full by April 15th. You can probably find the information at http://www.irs.gov .

    Susan

  3. #3
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    Forgot to answer your first question.

    Yes, I pay quarterly estimated taxes.

  4. #4
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    Yep, I (now) pay quarterly too.

    But, if you have a day job, and have enough withholding, you may be able to get away with it without paying quarterly. Look at your own situation very carefully, you don't want to have a nightmare like I had a week ago.

    What got me real bad was that I didn't realize I had to pay "Self Employment Tax". Apparently IRS and I think very differently about "self employment". I had a day job for 10-1/2 months last year, maxed out the 401K, claimed 0 on W4, paid a bunch of mortgage interests, plus some creative accounting, I still owed IRS almost 1,000 bucks (hopefully they don't impose penalty on it).

    The 4 payment dates for 2003 are 4/15/03, 6/15/03, 9/15/03 and 1/15/04.

    Your tax lady is probably the best to answer your tax-related questions. Or you may go to the IRS site that Susan provided, and search for Form 1040-ES. Also, don't forget about your state tax!

  5. #5
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    Yes, you do have to pay self-employment taxes also if you make over $400, which I really dread paying. When you work for someone else, they pay half of the self-employment (social security) taxes, but when you are self employed you have to pay the full amount yourself (15%). My self-employment taxes last year amounted to two and a half times as much as the regular tax.

  6. #6
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    Ya , Self Employment Tax (15%) is really a pain in the butt ...

    You can minimize SE tax this by forming a S corporation .... S corporation is a income passthro entity as LLC but there is no SE tax on the dividend (profits) from the corporation ( unlike LLC).

    But you have to pay yourself a resonable salary ( say 40k) and you will be paying payroll taxes on it (half by you and remaining by your corporation which is also basically you ) ...But in the remaining profits which pass to you there is no SE tax

    So basically the S corporation is best if you think you will be earning atleast 50k/year in AM , if not LLC is the best ...

    "The Future belongs to those who believe in the beauty of their Dreams."

  7. #7
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    Thank you everybody for the answers. Gonna talk to my tax lady tomorrow. I hope she won't tell me to go to Mexico for a while.
    By the way, that corporation thingie stuff, I like the idea. I've been thinking about it, just have no clue where to start. I remember someone here was having problems with taxes because he actually had a LLC (registered in Nevada as I remember). Another scary thought for tonight.


    Beer without vodka is wasted money

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