I can't really find much info about this, so hopefully someone here can clear this up! I have been self-employed for about 2 years doing graphic design services. I use Quickbooks Self-Employed to calculate my expenses and income for my graphic design business, and it estimates my quarterly taxes which I then pay each quarter through Quickbooks. Super simple because it's all in one place.
At the beginning of 2020, I started doing Shipt grocery delivery on the side for extra cash. This is contract work, so also a self-employed gig. I know that this is considered a different type of business and should be treated as such with the IRS. I'm just not sure how to go about calculating my quarterly taxes for this separate business and sending my payment to the IRS. The form 1040-ES (for calculating estimated tax) is very confusing to me... Can I do a rough estimate on my own of 20% of my quarterly earnings and pay that? Or can I just pay a little extra whenever I make my payments for my graphic design business? I'm just not sure if it's supposed to be a completely separate payment, or if that matters.
I've made about $4000 so far this year doing Shipt so I'm estimating that I owe a little over $800 right now. However, I do not want to be penalized at the end of the year for paying too much or too little on my quarterly taxes.
Thanks for any advice.
Just add the additional amount to the quarterly estimates you already make through QuickBooks.
You won't be penalized for paying too much, you'll just get a bigger refund at the end of the year.
To estimate the amount you owe for the second business, you calculate your quarterly net income (income minus expenses) and then multiply that by a percentage equal to your (Income Tax rate + SE Tax rate - (Income Tax rate x SE Tax rate x .5) ). So, if you are in the 12% tax bracket, your percentage would be approximately (12 + 15.3 - (.12 x .153 x .5) = 26.4%). That little subtraction in the formula is because you get to deduct as an adjustment to income half of your SE tax.
Just add the additional amount to the quarterly estimates you already make through QuickBooks.
You won't be penalized for paying too much, you'll just get a bigger refund at the end of the year.
To estimate the amount you owe for the second business, you calculate your quarterly net income (income minus expenses) and then multiply that by a percentage equal to your (Income Tax rate + SE Tax rate - (Income Tax rate x SE Tax rate x .5) ). So, if you are in the 12% tax bracket, your percentage would be approximately (12 + 15.3 - (.12 x .153 x .5) = 26.4%). That little subtraction in the formula is because you get to deduct as an adjustment to income half of your SE tax.