2024 is the first year I am not a W-2 employee. I a a 1099 M&A advisor contractor with an Investment Capital firm. August 1, 2024 I received my first compensation for a deal closed in 2024. I also believe this will be the only compensation this year.
I understand I need to pay both employer and my portion of FICA as well as I need to pay federal and state income taxes.
How do I do this?
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To report your 1099 self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. You can fill out Schedule C and enter Self Employment Income into Online Deluxe but if you have any expenses you will have to upgrade to Premium version. Or buy any of the Desktop programs. All the Desktop programs have all the same forms, but you will get the most help in the Home & Business version.
For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.
You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
The 1040ES quarterly estimates are due April 15, June 17, Sept 16 and Jan 15, 2025. Your state will also have their own estimate forms.
How to make the Estimated payments
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875
Here are the blank Estimates and instructions…..
https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Or you can pay on the IRS website. Be sure to pick 2024 1040ES payment
https://www.irs.gov/payments
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