Self Employed - How to set aside yearly taxes | TigerDroppings.com

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jsquardjj
LSU Fan
Member since Oct 2009
461 posts

Self Employed - How to set aside yearly taxes


I currently put the appropriate amount of taxes into a money market account monthly and pay the lump sum every April.

Is there a safe short term fund or investment that I can earn more on? Where does the self employed MT shelter their taxes?








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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
56328 posts

re: Self Employed - How to set aside yearly taxes


You should be paying quarterly taxes.





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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81083 posts

re: Self Employed - How to set aside yearly taxes


quote:

You should be paying quarterly taxes.


If you don't you may face penalties and interest for violating the "pay as you go" requirement.






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ThaBigFella
LSU Fan
baton rouge
Member since Apr 2006
2043 posts

re: Self Employed - How to set aside yearly taxes


my taxes are removed quarterly automatically based off previous years earnings, so just pile money into your bank account and dont worry the irs will take care of it for you





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BACONisMEATcandy
LSU Fan
Delta, Amex, & Über Threads
Member since Dec 2007
41619 posts

re: Self Employed - How to set aside yearly taxes


quote:

You should be paying quarterly taxes.






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jsquardjj
LSU Fan
Member since Oct 2009
461 posts

re: Self Employed - How to set aside yearly taxes


Ahhh, bad news. First I had heard of quarterly taxes but looks like I will need to start paying them. Thanks for the heads up!

Does it matter if I also receive a small W2 from one of the companies I consult for? Technically I am an employee of that company but it is less than half of what I make untaxed on my own. I have been doing yearly taxes the same way for 5 years and have not been penalized so far.






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Broke
LSU Fan
AKA Buttercup
Member since Sep 2006
56328 posts

re: Self Employed - How to set aside yearly taxes


You should be paying quarterly taxes. The shitstorm that will rain down on you when they realize it is going to be nasty. Go handle your business.





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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
13743 posts

re: Self Employed - How to set aside yearly taxes


Keep using money market, pay quarterly taxes. You have until the 15th to send your estimated tax payment and voucher.

You get up to 2.5% penalty for each month after missed payment, plus an underpayment penalty, plus interest which is compounded DAILY. The penalty rate and interest rate is pretty much whatever the IRS decides.

PAY THE frickING THING and keep those vultures out of your life.






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VABuckeye
Ohio State Fan
Oak Hill, VA
Member since Dec 2007
11104 posts

re: Self Employed - How to set aside yearly taxes


My company is an LLC treated as an S-Corp. I pay myself a salary and taxes are held out of each paycheck. I make sure that I over withhold. It's not a perfect situation but I really don't want to write a huge check every April.





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CourseyCorridor
TBD Fan
Baton Rouge, La.
Member since May 2012
1994 posts

re: Self Employed - How to set aside yearly taxes


quote:

You should be paying quarterly taxes.


Dumb question. How are the quarters measured? Is the end of June the end of the first quarter, with the fourth quarter coming at April filing deadline, or is it strictly by the calendar year?

I ask, because I switched at mid-year from employed to self employed in 2012, so I was OK for the first two quarters of having paycheck deductions. I ended up owing from the half year or so of having no deductions, paid that in April and have not paid a quarterly payment this year.

If I set it up for June, will I be able to make payments in June, October, January and at filing deadline and cycle it that way?




This post was edited on 6/5 at 12:19 pm


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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
13743 posts

re: Self Employed - How to set aside yearly taxes


June 15th, Sept 15th, Jan 15th, April 15th. Are the due dates


ETA: meant to say Sept 15th not Oct 15th
Corrected



This post was edited on 6/5 at 1:03 pm


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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81083 posts

re: Self Employed - How to set aside yearly taxes


quote:

June 15th, Oct 15th, Jan 15th, April 15th. Are the due dates

Close but not exactly. The third quarterly payment date is September 15, not October 15.

And to further confuse everyone, this year the dates are different because the 15th falls on a weekend or holiday for two of the due dates.

For 2013 tax year the dates are:

1st payment: April 15, 2013
2nd payment: June 17, 2013
3rd payment: Sept. 16, 2013
4th payment: Jan. 15, 2014*

Here is a link to the form which the taxpayer must file with his estimated tax payment: Form 1040-ES






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
13743 posts

re: Self Employed - How to set aside yearly taxes


frick, I meant September, corrected.





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islandtiger
LSU Fan
Baton Rouge
Member since Sep 2012
864 posts

re: Self Employed - How to set aside yearly taxes


My wife has her own business and it was always a challenge to set aside money regularly so we had the funds each quarter. I opted to increase my payroll tax deductions (state and fed) and no longer wory about it. I know, too lazy.





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jsquardjj
LSU Fan
Member since Oct 2009
461 posts

re: Self Employed - How to set aside yearly taxes


This thread led me to check my past returns, in which I discovered I was paying penalties for not doing quarterly the past few years. I might not make the extra "interest" I was originally looking for, but at least I will save on these fees AND realized I need a new tax guy.
Sometimes I am overwhelmed by my own financial stupidity.

Thanks for all the info.






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BayouBengal
LSU Fan
München
Member since Nov 2003
26712 posts

re: Self Employed - How to set aside yearly taxes


quote:

Does it matter if I also receive a small W2 from one of the companies I consult for?


Doesn't matter. If you do any work that results in a 1099 then you need to do it. I have to pay quarterly this year even though less than 5% of my income last year came from some side work that I did resulting in a 1099.






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756
LSU Fan
Member since Sep 2004
9580 posts

re: Self Employed - How to set aside yearly taxes


you pay quarterly taxes and if you do not you will owe penalty pay you taxes or bama gonna come get you





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mohalk
LSU Fan
South Timbalier
Member since Feb 2009
173 posts

re: Self Employed - How to set aside yearly taxes


I have a question about quarterly taxes. I'm a student with a part-time research job but I also own an LLC which I provide training services through - no retail.

I keep good track of my accounting and I don't make a whole lot of money through it because it's only part time work. Do I need to be paying quarterly taxes on this too?






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LSURussian
LSU Fan
Baton Rouge
Member since Feb 2005
81083 posts

re: Self Employed - How to set aside yearly taxes


I believe the threshold for having to pay estimated taxes is $1,000.

IOW, if you anticipate owing $1K or more in taxes when you file in April, including self-employment taxes, you need to submit quarterly estimated taxes.

I'm sure you could google it or do a search on the IRS.gov website.






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Vols&Shaft83
Tennessee Fan
Member since Dec 2012
13743 posts

re: Self Employed - How to set aside yearly taxes


Paging Poodlebrain





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