Started an LLC and working on a 1099. Also have regular W2 income.
-How do I maximize my tax savings via this 1099 channel?
-Do I need to worry about paying quarterly tax payments?
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What kind of LLC? If it is a Single Member LLC that is NOT a S corp it is a disregarded entity and you file it on Schedule C in your personal tax return as self employment.
You will pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C in addition to regular income tax on it. You pay 15.3% SE tax on 92.35% of your Net Profit (If it is 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.
Turbo Tax guide to Estimated taxes
A Guide to Paying Quarterly Taxes - TurboTax Tax Tips & Videos
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).
Yes it’s a single member LLC. I was hoping to try and find a good amount of deductions through the LLC, which would in turn, help lower or offset the tax due. The 1099 amount will be about $50k for rest of this year. Any help/advice is appreciated.
Assuming your SMLLC is not an S Corp, Here is some IRS reading material……
IRS information on Self Employment
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center
Pulication 334, Tax Guide for Small Business
http://www.irs.gov/pub/irs-pdf/p334.pdf
Publication 535 Business Expenses
http://www.irs.gov/pub/irs-pdf/p535.pdf
You pay Self Employment tax on $400 or more of net profit from self-employment in addition to any regular income tax. 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.
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