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If I accept a 1099 independent contractor job, is there anything I need to do right away as far as taxes go? Should I just set aside money for next year's tax filing?

I am considering getting a second job and most of the positions that fit my schedule are 1099 independent contractor jobs. I also have a full time W2 position with another company. Would I need to begin making estimated tax payments right away or will that go into effect after I file taxes next year (for 2024)? Are estimated tax payments required or are they optional? I don't want to accept a position and then find myself in trouble later on.
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2 Replies
BillM223
Expert Alumni

If I accept a 1099 independent contractor job, is there anything I need to do right away as far as taxes go? Should I just set aside money for next year's tax filing?

You normally should have paid at least 100% of last year's tax by the end of the year. Note that your tax will apparently increase a lot because you will be paying income tax on your 1099-NEC as well as self-employment taxes on your net profit from the side gig.

 

Don't wait until the end of the year, but create a test return (easier if you have the desktop software - Online requires a separate TurboTax account), and try out your probable tax return, assuming that the 2023 software will put you in the right ballpark. Then aim to have paid 100% of tax by the end of the year (just to be safe).

 

I have done this, and I would put 25% of my gross each pay period into a savings account from which I would make as an estimated tax payment every quarter.

 

Your numbers will absolutely vary because some people have such high withholding on their W-2, that they don't need to do this. But you won't know until you make the test return.

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If I accept a 1099 independent contractor job, is there anything I need to do right away as far as taxes go? Should I just set aside money for next year's tax filing?

there are four estimated tax payment dates.

IRS expacts you to estimate your tax and keep uptodate

because, as a contractor, there will be no withholding.

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