Self Employment 1040-es

[ChrisA1222]

Hi! I just recently (Apr 3) started delivering for Instacart. My wife and I already filed our taxes for 2019 and received our refund. I’m curious if I need to refile or something and do a 1040-es because now I’ll have estimated self employment earnings this year. If I need to do more documents, is this something I can do in TurboTax?

I’m a little lost when it comes to this side of taxes, so any help would be greatly appreciated. Thanks in advance!

[HelenC12 · Accepted solution]

No, you don't have to re-file or do anything with your 2019 income tax return(s). 

Yes, you may have to pay estimated taxes in 2020. You can use TurboTax to calculate your estimated taxes and print out the 2020 1040-ES forms.

You may pay the IRS directly instead of mailing in the 1040-ES form with a payment.

Additional information: 

• How does TurboTax calculate my estimated tax payments?
• How do I print estimated tax vouchers for my 2020 taxes?
• A Guide to Paying Quarterly Taxes
• What is IRS Form 1040-ES: Estimated Tax for Individuals?

[joshualwe]

@HelenC12 

I started Instacart recently as well (April 25) and I've made around 250 and im planning on making more than 600. I turned 18 January and before Instacart, I've never had a job so do I also have to file the 1040 ES and start paying quarterly taxes before the July deadline? I went on the calculator and nothing applied to me and as most of the questions were about taxes for 2019 so I'm guessing I'll pay quarterly taxes 2021?. Or is that calculator for only tax refunds in 2019 ( which I obviously wouldn't have) and not quarterly taxes. And for the 1099, I would file it April 2021 correct? Hope you see this because I'm new to all this and it's confusing haha. Thanks

[DavidS127]

You start paying estimated taxes in 2020 for the income you are earning in 2020. 

The due dates for you 2020 estimated taxes are:

First estimate for January 1- March 31                   7/15/2020 (normally 4/15, but extended this year for COVID --19)

Second estimate for April 1-May 31                        7/15/2020 (normally 4/15, but extended this year for COVID --19)

Third estimate for June 1 - August 31                     9/15/2020

Fourth estimate for September 1 - December 31    1/15/2021

If you are making estimates for the additional taxes for the new self-employed business only (i.e., otherwise your taxes are sufficiently withheld), to estimate the amount you owe for the new business, you calculate your net income for each of those periods (income minus expenses) and then multiply that income by a percentage to get the amount to pay.

Your percentage for estimated taxes is equal to your (Income Tax rate + SE Tax rate - (Income Tax rate x SE Tax rate x .5) ).  So, if you are in the 12% tax bracket for this additional income, your percentage would be approximately (12 + 15.3 - (.12 x .153 x .5) = 26.4%).  That little subtraction in the formula is because you get to deduct as an adjustment to income half of your SE tax.

See this IRS website for FAQs related to estimated taxes.

[joshualwe]

I see thank you. Sorry I have a lot of questions. I have the TurboTax Freefile Program so I really dont know all the files or steps I need to fill like the 1040 1099 and the miles so if you could tell me what I need to fill days before. Or is the 120 dollar self employed program better for deductions and the one I need?

I do Instacart and some Postmates, and for the miles, I don't use the tracking apps like everyone does. I take notes in my phone of my miles using the tripmeter by resetting when i leave home and taking my miles down when I'm back home. I do separate my Postmates miles from Instacart. I also take notes of estimated locations but not exact locations. Do you know if that info fine when I'm filling out my Excel form?

I started working in the second period and I'm not sure how much I'll be making by the 7/15/2020 so do I estimate days before the deadline? And I'm estimating my income after deductibles for this period and multiplying it by 26.4 percent correct? What if I estimate lower or higher? 

I'm in the quarterly tax section TurboTax Free File program right now. I only see estimated tax sections for 2019 and 2018. If I were to estimate days before 7/15/2020, i would change the 2019 dates to 2020, put in my estimated net income times the percent, and be done?

Thanks again for replying.

[RobertG]

You are on the right track in estimating 25% or so of your net income to send in as quarterly payments. 

Quarterly payments are not legally required, but if you underpay you will be charged an underpayment penalty, which is like being charged 6% interest on your underpayment.

The IRS makes it easy to pay; just go to their website: Paying Your Taxes.

TurboTax has a good article on this: Estimated Taxes: How to Determine What to Pay and When.

@joshualwe