Hi ChipJamp!
For your situation, since your income was not earned throughout the entire year, you can take advantage of what the IRS calls "annualizing" your income, which means you can break out your income into the four periods the IRS uses for estimated tax payments.
- Jan 1 to Mar 31 - payment due 4/15. For this period, you had no income, so no payment would be due.
- Jan 1 to May 31 - payment due 6/15. For this period, you had some income, but you did not make a payment.
- Jan 1 to Aug 31 - payment due 9/15. You definitely will want to make a payment for this installment.
- Jan 1 to Dec 31 - payment due 1/15/2025. You definitely will want to make a payment for this installment.
You mentioned you will earn over $91K during 2024. Since you will receive a 1099, you'll report that income on Schedule C on your personal taxes. Is that number your gross earnings? Will you have any expenses to offset your income? Your taxes are calculated on your net self-employment income.
Also, because you're self employed, you will owe both income tax AND self-employment tax. Your quarterly estimated installments should include tax payments for both types of tax.
Since you missed the 6/15 payment date, I recommend calculating the tax you would owe through Aug 31, and make a payment no later than 9/15. Then, make the 4th payment by 1/15/2025. Aim to have paid in either 90% of the 2024 tax liability or 100% of 2023 tax liability to avoid underpayment penalties.
Here's a link with more information about estimated taxes: A Guide to Paying Quarterly Taxes
Since you are self employed, you have options to contribute to retirement accounts that aren't available to W-2 employees, such as a SEP IRA. You can contribute 25% of your net earnings from self-employment and take a tax deduction for the contribution. Here's a link with more information: Retirement plans for self-employed people
Thanks for participating in TurboTax's Ask the Expert event today. I hope this information was helpful!
Sincerely,
Kimberly, CPA for over 30 years
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