How to estimate 1099-MISC tax payment

[nic]

I received regular employment income reported on a W-2 for tax year 2018.   However, I'm considering taking a contract job on a 1099, which I'm not familiar with and need your help please.

1. What are the taxes that I am required to pay on a 1099-MISC?

2. How do I estimate the tax percentage and tax amount?

3. How do I pay the income tax I owe to the IRS quarterly so that I don't have to pay 100% I owe at tax time?

Thanks so much!

[Rainman12]

1) Regular tax - Federal Income Tax - based on AGI - plus Self-Employment tax, about 15% of net SE income.

2) Most common rate for FIT = 22%; add 15% SE tax, around 40% of net income.

3) Pay estimated taxes directly to IRS on-line at https://www.irs.gov/payments 

[nic]

Hi Rainman,

Thank you for your answers and the quick reply.  Much appreciated!

For question # 1, you mentioned paying Federal & Self-Employment taxes (approx. 40%). 

  - I understand Federal and State are the taxes that I have to pay regardless of W-2 or 1099. 

  - With the 1099, wouldn't I need to pay for Social Security and Medicare taxes? 

  - If yes, what are the percentages?  I would need to add this percentage to the 40%, correct?

For question # 3, is there a form that I can use to calculate/estimate the 1099 quarterly tax amount to pay the IRS?

[Hal_Al]

"Self Employment tax" (SET) is social security and medicare tax  (known as FICA on your W-2 pay stub). SET is how the self employed pay their FICA.

If you already pay the maximum social security tax on your w-2 wages (wages over $132,900), then your SET would only be 2.9%.

TurboTax (TT) can prepare the quarterly payment vouchers. In your 2018 software, enter at:

Federal Taxes 

-Other Tax Situations

  -Other Tax Forms

    -Form W-4 and Estimated Taxes - Click the Start or Update button

On the next screen answer No to the W-4 question

If your goal is just to avoid the underpayment penalty, then paying 100% of your prior year tax liability is the “safe haven”


Or you can obtain  blank IRS Form 1040-ES from the IRS. The form and instructions are at this link:  https://www.irs.gov/pub/irs-pdf/f1040es.pdf

You can also pay Federal directly here.  Be sure to select 1040ES:

https://www.irs.gov/Payments