Do I benefit from paying quarterly taxes over standard filing?

[ZakNorton]

Greetings,

I am a freelancer in the film and television industry. The vast majority of my jobs are W2 payroll; however, I do tend to do invoices for 1099 income as well. My understanding has always been that if I paid quarterly taxes, I could manage my business versus personal expenses a lot easier relating to deducting my overall taxable income. However, I have been using Intuit Self-Employed for years now, though I haven't utilized the quarterly tax feature because I never saw the benefit in it. Can you help me figure out if this product is the most efficient and cost-savings way for me to manage my expenses and income over the year? I end up having dozens of 1099s and W2s by the end of the year! 

Also, it's important to note that I do not have an LLC or S-Corp, and I very, very rarely "hire" a contractor to work for me. 

Thanks!

Zak 

[AnnetteJD]

Hi ZakNorton! 

My general answer is yes, TurboTax is the best way to do this, but I have a couple of questions first.

1. Do you generally end up owing taxes at the end of year - either self-employment tax on your 1099NEC income or income tax on your W-2 income?

2. How are you keeping track of your expenses for your Schedule C? 

[ZakNorton]

1. I do not end up owing taxes at the end of the year. 

2. I subscribe to the QuickBooks Self-Employed app that allows me to select if each expense is a business or personal expense.

I would also be curious to know if establishing myself an LLC would be more advantageous for my Schedule C since I am a freelancer (that strangely enough has multiple W2/payroll employers throughout the year!) 

Thanks!  

[AnnetteJD]

Hi again Zac. 

If you don't end up owing taxes, then you don't need to make estimated payments. Some years it might be a good idea to increase your withholding slightly because you have multiple jobs, but if you aren't owing at the end of the year, it sounds like you have it under control. 

An LLC, a Limited Liability Company, is a legal, rather than a tax, construct. Here is some information from the IRS on the topic: https://www.irs.gov/businesses/small-businesses-self-employed/limited-liability-company-llc.

Based on what you have told me about your situation, it doesn't sound necessary. But I don't practice law in California, so you might want to have a brief consultation with a business lawyer to see if there might be advantages under California law having to do with issues other than taxes. 

All in all, it sounds like you are in good shape. Keep it up and let us know if you have any questions in the future. Thanks for stopping by to our event!

regards,

Annette