1.) I just went from a w2 employee to a 1099. How do I know how much to pay each quarter? I do not see in quickbooks and it is not fully accurate as I have not separated all my expense that I pay each month like phone bill, home internet, home office etc.
2) Do I just pay federal Quartey taxes or have to pay state as well?
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1.You can find out if you owe estimated taxes by using the Tax Withholding estimator within the Estimated Taxes article.
2.Depending on what state you are in, you may need to file estimated taxes for that state.
Tax-free states include: Alaska, Florida, Nevada, New Hampshire, South Dakota, Tennessee, Texas, Washington, and Wyoming.
You will owe Self Employment Tax. 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 (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 (FICA). So you get social security credit for it when you retire. It is in addition to any regular income tax you owe on it.
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.)
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