Business & farm

kwallace4 · ‎September 4, 2024

Hi Lulukern, sorry for the late reply. Let me answer in order of your questions:

Tax forms & quarterly filing - If you do not incorporate and are not a partnership, you will complete a schedule C with all of your income and expenses. If you anticipate owing more than $1K for the year, then yes would would want to make four equal installments for ES payments which include SE and income tax. You can use the Taxcaster to help. Also, here is a guide on ES payments.

Why do I have to pay quarterly taxes and how can I avoid it? - Ours is a pay as your go system so the IRS will penalize you if you don't make ES payments when you owe $1K or more. You would not need to make estimate payments if you do not show a profit. You may be able to annualize your income to avoid penalties as well if you have uneven cash flow income periods. If you have a day job in addition to self employment, you might be able to withhold extra on a w4 withholding but it would be tricky to hit just the right number. ES payments might be easier if you have a large profit.

How much do I need to pay in quarterly estimated taxes? - You can use the taxcaster above for this. The rate would be 15.3% for SE tax PLUS whatever your marginal tax rate is here below. Add these two percentages together and apply against your estimated income after expenses and the divide by 4:

Tax Rate	For Single Filers	For Married Individuals Filing Joint Returns	For Heads of Households
10%	$0 to $11,600	$0 to $23,200	$0 to $16,550
12%	$11,600 to $47,150	$23,200 to $94,300	$16,550 to $63,100
22%	$47,150 to $100,525	$94,300 to $201,050	$63,100 to $100,500
24%	$100,525 to $191,950	$201,050 to $383,900	$100,500 to $191,950
32%	$191,950 to $243,725	$383,900 to $487,450	$191,950 to $243,700
35%	$243,725 to $609,350	$487,450 to $731,200	$243,700 to $609,350
37%	$609,350 or more	$731,200 or more	$609,350 or more

What’s the penalty if I don’t pay quarterly self-employment taxes? - The failure-to-pay penalty, which is 0.5% of the amount owed for each month and the part of a month for which the tax is not paid. The total is capped at 25%. Interest accrues at 8%. Again, this is only if you owe, if you don't pay in at least 100% of the tax withheld in the prior year (110% if you make over $150K), or if you do not pay in at least 90% of the current year's tax due.
Do I have to pay quarterly estimates to my state too? - You may. Some states require ES payments quarterly just like the IRS and some do not, in which case, you can pay at year end. You will need to check on your particular state's revenue department.

Is he eligible to do the payments to 401K if he is self-employed? - I believe you are asking about self-directed 401K plans or SEP or SIMPLE plans for the self-employed. Yes, you can participate in these plans (see here).

Can we still do the married joint filing together or do we need to do a separate tax filing one for me and one for my spouse? - You can file married joint if one of you are a Sch C or even a single member LLC or Qualified Joint Venture dual member LLC.

Yes, you absolutely can tax expenses related to business use of your car. You can track mileage AND keep receipts of all your expenses, or you can use the standard mileage rate (SMR). The SMR includes depreciation, gas, oil, maintenance, insurance etc. The only thing it doesn't include is interest on a loan for the car.

Cheers!