Underpayment penalty

[D4niel]

Every year I’m getting an underpayment penalty and I don’t know how to find the reason, I work for UberEats, is it mandatory for UberEats drivers to file taxes every quarter? And am I getting the penalty because I don’t do that? 

[xmasbaby0]

Probably----you have self-employment income and the tax system is pay as you go--if you are not paying any estimated tax during the tax year, then at tax time in April, you owe self-employment tax and ordinary income tax.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099-nec/1099-nec/L5qTsBiSe_US_en_U...

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https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://blog.turbotax.intuit.com/self-employed/self-employed-tax-deductions-

calculator-2021-2022-50907/

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

https://turbotax.intuit.com/tax-tools/calculators/self-employed/

[KanchanM · Accepted solution]

Being an UberEats driver, you need to pay quarterly estimated taxes. But file your tax return annualy only not every quarter. IRS uses pay-as-you-go income tax system, meaning that we should pay our taxes as we earn income. So if we do not pay our taxes during the year when are earning the income, we may owe penalties. Even if we get refund when we file our taxes, we can be charged penalty for late payment of taxes. Thus, paying quartely taxes can avoid penalty at the end of the year. 

Every quarter you pay estimated taxes that include your income tax and self-employment taxes (Social Security and Medicare). You can calculate your taxes using TurboTax Tax calculator Once you know your estimated taxes, you can divide it by 4 to know your quarterly estimated tax. You can adjust yor taxes in subsequent quarters based on increase or decrease in your income.

You can pay your taxes to IRS online or trough mail. You can use this link for making IRS payments online. You can also make payment through mail using this link. When you file your annual tax return, you pay the balance or get a refund. If you have overpayment/refund, you can consider applying that to next year's taxes.

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