Hello Nathan, and thanks for your questions!
You asked:"How do I estimate quarterly taxes? Do I even need to pay them if my 1099 income will not exceed my standard deduction of 14k?"
How do I estimate quarterly taxes?
As a general guideline to help you determine the estimated amount for quarterly taxes.
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Estimate your total income for the year. Consider your income from all sources, including your salary, freelance work, investments, and other earnings.
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Determine your anticipated deductions and credits. These could include expenses related to self-employment, retirement contributions, and other tax deductions.
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Calculate your expected tax liability for the year. You can use tax software or a tax professional to help you with this calculation.
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Divide your expected tax liability by four. This will give you the estimated amount you need to pay each quarter.
Do I even need to pay them if my 1099 income will not exceed my standard deduction of 14k?
Your standard deduction and other factors do figure in to the total amount of taxes you owe. However, as a self employed individual you are subject to self employment taxes which are calculated based on your net profit from your business. and is over and above the income tax one pays. The self-employment tax is the self-employed person's version of the FICA taxes paid by employers and employees for Social Security and Medicare taxes, and is calculated based on 92.35% of your net earnings from self-employment. This tax can not be eliminated or reduced by your standard deduction.
For example: If one has a total of $13,000 intotal income from all sources, and a standard deduction of $14,000, this would take your total income subject to income tax to $0. So no income tax would be due, however you would still have self emplyment tax due of $1989 to pay on that $13,000.
An easy formula to apply to figure out how much self employment tax you will owe is to take your total net profit, and multiply by 15.3%.
Are itemized deductions - are these submitted with quarterly estimated payments or only during the annual return?
Itemized deductions are reported only during the annual tax return when you file Form 1040 or 1040-SR. Quarterly estimated tax payments are used to pay a portion of your estimated tax liability for the current year. The estimated payments throughout the year represent prepayments of your annual tax bill to reduce the amount of tax owed when filing the yearly return.
You can choose to adjust your quarterly estimated payments if you plan to itemize your deductions on your tax return. You can adjust your withholding and quarterly estimated payments to reflect those deductions to ensure you're paying the appropriate amount of estimated taxes. However, you won't submit itemized deductions with quarterly estimated payments.
Please feel free to reach backout with any additional questions or concerns you might have!
Have an amazing rest of your day!
Terri Lynn, EA
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