@santisamurai wrote:
Hello,
I'm currently employed and receive a W2. I have already filed my taxes for 2019. However, recently I did a small consulting job for a friend's business and they paid me over $600, but less than $2,000. Understanding that I have to pay taxes on this amount according to the 1099-MISC I had a few questions.
- I understand that I have to prepay the taxes quarterly. However, does that only apply to the amount that I made in the 1099 or does that also incorporate my normal pay?
- I currently have Premier, can I file the necessary paperwork using this version or do I need to upgrade to another version?
- I have reached the IRS limit for Social Security in my current employer. Do I have to pay into it when submitting and will I receive back after filing next year?
Thank you
You must generally pay estimated tax payments, although there is no penalty if the amount you owe at tax time is less than $1000, or if you have paid into the system already (by withholding and other payments) at least 100% of last year's tax liability (or 110% for high income earners.) You may not actually be required to make an estimated payment for this $2000 side gig, depending on your other tax facts, although it would not hurt to do so.
Using the Desktop software installed on your own computer, any version Deluxe or higher can prepare a schedule C for self-employment. If you are using Turbotax online, you would need the Self Employed version. No version of 2019 Turbotax will help you make the estimated payment for 2020, Turbotax just isn't designed to do that. Accounting software like Quickbooks will do that, but it's not worth the cost for just one small side gig.
When you file your schedule C and schedule SE as part of your 2020 tax return, you will pay 3% self employment tax (the Medicare part) rather than 15% (combined SS and Medicare). Whatever estimated payment you make now simply goes to your account is applied to your overall tax bill; you don't make separate estimated tax payments for income tax and SE tax.
For the amount of your estimated payment, look at your top tax bracket depending on your income and family situation and add 3% for self-employment tax. Figure the tax on your net income after expenses. You can make a payment directly at www.irs.gov/payments. When you prepare your tax return, don't forget to enter the estimated payment on the "Estimates and other taxes paid" page.
https://www.aarp.org/money/taxes/info-2020/income-tax-brackets.html
