I am new to being an independent contractor. I began a couple of part-time gigs last year and earned income from these gigs during the final quarter of 2023. However, my income was only 1,130.42. It is my understanding that The IRS requires quarterly estimated tax payments if you expect to owe at least $1,000 in federal tax for the year and North Carolina state tax appears to follow the same rule. While I don't expect to have to pay 1,000 in taxes, how do I know for sure? If necessary, I will need to submit an estimated quarterly tax payment by January 16th.
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as an IC you owe self-employment tax of about 14% of your net self-employment income. so if that number is net you'll owe the IRS about $160 as SE tax but no federal income tax for 2023. I don't know the rules for NC if you have no income tax liability in the prior year (2023) when you file for 2024
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here are the federal estimated tax rules to avoid penalties in 2024
There will be no federal penalties for not paying in enough taxes during the year if:
look at option 2.
assuming 1) that $1130 is your net SE income 2) your 2023 SE tax is about $160 and 3) you have no other additional taxes or tax credits, then to avoid penalties regardless of what 2024 is you only need to pay that $160 - $40 each quarter. (4/15/2024, 6/17/2024,9/16/2024, 1/15/2025).
if you expect to owe more in 2024 and don't want to owe a lot come 4/15/2025 you can pay any additional amounts that you want.
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