1099 Quarterly taxes

[Kathee]

I was just given a W9 for a side job that I have worked on weekends for 5 years now. My employer states the 1099 will start as of now and not the beginning of the year. I am interested to know more about the Quarterly taxes...as this Forum is the first time I have heard of it.

[James-B]

This is a great question and thank you!  Estimated taxes are due if you believe you will owe at least $1000 in tax for the current tax year after your withholding and credits are considered.  So, if your normal job takes out enough to cover the taxes on the side job income, there may not be a need for estimated taxes.  However, if you think you’ll owe more than $1000 in taxes due to the additional side job income, then you’ll want to consider quarterly payments.

Quarterly taxes are due 4 times a year for the IRS and 3 to 4 times a year for your state (if they have a state tax).  The IRS likes to collect tax as close to the time you make the money as possible, so you would “estimate” the amount of tax you owe on the revenue you made in each quarter and send the payment to them.  The estimate is like withholding on your W-2, but you have to send it in instead of the company sending it for you. 

Here is a great reference for additional questions related to Estimated Taxes:  Estimated Tax | Internal Revenue Service (irs.gov)

Hope this helps and have a fantastic day!

[MarthaT]

Absolutely,  since you are getting form 1099-NEC you are considered a self-employed individual, meaning you are your own boss.  As self-employed individual you need to pay your federal income on the net income you generate and also, the most important, is the Social Security and Medicare as an employee and as employer, which is the self-employment tax.  You would pay 15.3%(12.4% SS & 2.9%Medicare) of your net income (Income - Expenses).