W2 and 1099 income

[hjobanpu]

Hello,

During year 2022, I worked for Corporate first 7 months and then last 5 months I am an independent contractor in the IT field and will be receiving 1099 for that.

Due to 2021 tax situation, I have paid Quarterly ES during 2022. I used calculators online to estimate the total tax for the year 2022. The total of tax deducted from my paychecks ( my estimate of what would show up on W2) and four estimated payments I made in 2022 will be higher that the estimated total tax for the year 2022 (that I calculated using an online calculator). So the question I have is do I still need to send Self Estimated tax payment for 1099 income of 5 months?

Thanks

[leeloo]

No, if your withholding and estimated payments sufficiently cover your tax liaility, then you do not have to make further payments.

[hjobanpu]

Thanks. Appreciate the recommendations to estimate the tax Fed, Social Security, Meidicare and CA for the year 2022  with W2 income and 1099 income.

[VolvoGirl]

You will also need to pay Self Employment Tax on the 1099 income.  Here's some general info on self employment......

To report your 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 or Premier but if you have any expenses you will have to upgrade to the Self Employed 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.

Turbo Tax Self Employment info
https://turbotax.intuit.com/tax-tips/self-employment-taxes/beginners-tax-guide-for-the-self-employed...

You might want to use Quicken or QuickBooks to keep tract of your income and expenses. There is one called QBSE QuickBooks Self Employed that works with Online Turbo Tax and will give you a free online tax return next year.
https://quickbooks.intuit.com/self-employed

You need to report all your income even if you don't get a 1099NEC or 1099Misc. You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.

After it asks if you received any 1099NEC it will ask if you had any income not reported on a 1099NEC. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment. You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400. The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare. So you get social security credit for it when you retire. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040. The SE tax is already included in your tax due or reduced your refund. The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……
IRS information on Self Employment
https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

1040 Schedule C Instructions
https://www.irs.gov/pub/irs-pdf/i1040sc.pdf

Publication 535 Business Expenses
https://www.irs.gov/pub/irs-pdf/p535.pdf

[hjobanpu]

Thanks. Info you shared is useful for filling.

I am looking for how to best estimate Self estimated tax for months of self employed + W2 income for months I was employed. Appreciate the recommendations to estimate the tax Fed, Social Security, Meidicare and CA for the year 2022  with W2 income and 1099 income.

[hjobanpu]

I understand I need to pay self employment tax. My question is since I had already higher deduction from W2 and paid 4 Estimated tax payments - that totals to higher than tax estimates for 2022 as per Turbotax calculations and Tax Caster calculation, do I need to send in any self employment tax payment? or not?

[Rick19744]

No.  Reread @leeloo response as this addresses your question.

Your estimated tax payments and withholding are designed to cover both income tax and self-employment tax.