Beginning in January I took a new job. 2019 was W-2. 2020 is 1099. This is the first time I've done full-time 1099 work. I know I need to pay estimated taxes. We already filed our 2019 taxes. QuickBooks has given me an estimated taxes amount for 2020 (but it does not know any of my husband's and tax status; and I'm not sure if that even matters). Do I need to do an "amended 2019 tax form" to get an accurate picture of what to pay and so TurboTax will generate the Vouchers? Just want to do what is right and not sure how best to do it (and clearly missed it when going through TurboTax for our 2019 taxes). Thank you for your guidance/help.
The minimum I would recommend would be at least the 15.3% social security and medicare taxes. If you can project approximately how much you will earn next year and all else stays the same, you can do a mock return in the online version and then just abandon it when you see your tax liability.
When making estimated payments, it is better to pay in a little more heavily at the beginning rather than at the end. Even if you pay in the sufficient amount, you could still have an underpayment penalty due to late payments.
Thank you. That makes sense. So from what you're saying, can I simply use the 1040-ES Estimated Tax Payment Voucher, send in my estimated taxes, and then see what happens when I file my 2020 taxes in 2021?
Yes, If you've completed the mock return and you have the vouchers, you can send them in. Coleen D3 also wiserly advised that you also include 15.3% for self employment tax.
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This yr 2020, I have taken a job with Postmates during the c19 situation.
I realize I have to pay tax's. It's a 1099 position. How /or can I compose my expenses ongoing with turbo tax for the upcoming tax season in January? Help! It's all new to me?
I've been self-employed for just over 15 years now. Every quarter I send the IRS 20% of my *gross* earnings. Period. Come tax filing time I am always within $1000 of whatever my total tax liability comes out to be. In my personal opinion (and we call know what those are like) doing the paperwork and projections is just a waste of time and effort. If you just send the IRS 20% of the gross earnings each quarter, then come tax time you'll be fine.
In the 15 plus years I've been doing this, I've always gotten some of it back in the form of a refund. In the two years I actually owed the IRS more, it was less than $500. That's not a big deal either. Just write the check and be done with it. Here's how this works.
If at the time you file your tax return, you owe the IRS lses than $1000 or less than 10% of your total tax liability (whichever is *HIGHER*) then no underpayment penalties will be assessed. So by sending the IRS 20% of your gross business income, when you file your taxes and take into account your allowed business expenses it would be unusual to "not" be within the threshold that would trigger a penalty.
Also note that quarterly taxes are not due on a "true" quarterly basis. For the 2020 tax year the schedule is:
1st Payment January 1 to March 31 July 15, 2020
2nd Payment April 1 to May 31 July 15, 2020
3rd Payment June 1 to August 31 September 15, 2020
4th Payment September 1 to December 31 January 15, 2021
The 1st payment is normally due by April 15th. But it's changed for 2020 due to the C-virus.