Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
Anonymous
Not applicable

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

Also wondering if how to estimate the taxes I will be.
1 Best answer

Accepted Solutions
Opus 17
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

When you are self-employed you are responsible for your own income tax and self-employment tax.  Self-employment tax is 15% of your net profit after expenses (so be sure to carefully document your income and expenses.)  Income tax is 10-39% of your total income after considering all your income and your personal deduction, dependents and credits.

You are responsible for making estimated payments 4x per year (April 15, June 15, Sept 15 and January 15).  You can skip the January 15, 2018 estimated tax payment if you file your return and pay in full by January 31, 2018.

The penalty for making late payments is 0.5% per month of the amount owed.  The IRS will figure the penalty separately from each tax period.  So let's suppose you started your job in July and you owe $5000 at the end of the year and you pay in full on April 15, 2018.  The IRS will figure 7 months' penalty on $2500 due from Sept 15 and a separate 3 months' penalty based on the other $2500 due January 15.  In addition to the penalty, there is interest charged on the overall balance due (penalty plus tax) at a variable rate that is currently around 4% APR. 

Any amount you can pay early will reduce your eventual penalty.  (Paying the September installment now, for example, will be better than waiting until January 15 or even April 15.)  You can make estimated payments at www.irs.gov/payments.

For more general information on paying self-employment taxes and estimated payments, I have asked another user to post a collection they have put together.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

8 Replies
SweetieJean
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

What type of 1099?  1099-MISC? 1009-R?
fanfare
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

Time to start putting away for taxes (Estimated Tax to the US Treasury) is now !
xmasbaby0
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

When you request an extension, it only gives you more time to get your documents together. It does NOT give you more time to pay the tax due,  Your tax due is still due on the April filing deadline, and penalties accrue if you do not pay in April.  The penalties and interest are calculated by the IRS when you finally do pay, based on how late you pay and how much you owed.  They bill you when they process the payment.
**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**
Anonymous
Not applicable

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

SweetieJean: No idea what type of 1099 I will be filing.

Fanfare: Terrible comment annnnnnd [Profanity removed]. Obviously I would like to pay on time and in full. But extenuating circumstances arose which prevent that.

xmasbaby0: Thanks. Filing on time wont be a problem it will just be paying. Thanks again.
Opus 17
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

@VolvoGirl can you post your links?
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Opus 17
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

When you are self-employed you are responsible for your own income tax and self-employment tax.  Self-employment tax is 15% of your net profit after expenses (so be sure to carefully document your income and expenses.)  Income tax is 10-39% of your total income after considering all your income and your personal deduction, dependents and credits.

You are responsible for making estimated payments 4x per year (April 15, June 15, Sept 15 and January 15).  You can skip the January 15, 2018 estimated tax payment if you file your return and pay in full by January 31, 2018.

The penalty for making late payments is 0.5% per month of the amount owed.  The IRS will figure the penalty separately from each tax period.  So let's suppose you started your job in July and you owe $5000 at the end of the year and you pay in full on April 15, 2018.  The IRS will figure 7 months' penalty on $2500 due from Sept 15 and a separate 3 months' penalty based on the other $2500 due January 15.  In addition to the penalty, there is interest charged on the overall balance due (penalty plus tax) at a variable rate that is currently around 4% APR. 

Any amount you can pay early will reduce your eventual penalty.  (Paying the September installment now, for example, will be better than waiting until January 15 or even April 15.)  You can make estimated payments at www.irs.gov/payments.

For more general information on paying self-employment taxes and estimated payments, I have asked another user to post a collection they have put together.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
VolvoGirl
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

Are you asking about getting a 1099 instead of a W2 for working?  That will be a 1099Misc.  That is self employment income.

Some general info.  You will need to keep good records.  You may get a 1099Misc at the end of the year if someone pays you more than $600 but you need to report all your income no matter how small.  You might want to use Quicken or QuickBooks to keep tract of your income and expenses.  

There is also QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed  return....
<a rel="nofollow" target="_blank" href="http://quickbooks.intuit.com/self-employed">http://quickbooks.intuit.com/self-employed</a>

To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax.  You will need to use the Online Self Employed version or any Desktop program but the Desktop Home & Business version will have the most help.

Self Employment tax (Scheduled SE) is automatically generated if a person has $400 or more of net profit from self-employment.  You pay 15.3% SE tax on 92.35% of your Net Profit greater than $400.  The 15.3% self employed SE Tax is to pay both the employer part and employee part of Social Security and Medicare.  So you get social security credit for it when you retire.  You do get to take off the 50% ER portion of the SE tax as an adjustment on line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

PAYING ESTIMATES
The first year you don't need to pay estimates as long as you pay in (by withholding) as much as your tax was last year.  But if you will have a big income you should send in estimates so you don't owe too much next April on your tax return.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.
 
- 2. You expect your withholding and credits to be less than the smaller of:
    90% of the tax to be shown on your current year’s tax return, or
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)
Opus 17
Level 15

Filing 1099 for first time. May not have money to pay by Apr. Wondering what extension to use and what the penalties and fees will be??

Thanks!
*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Dynamic AdsDynamic Ads
Privacy Settings
v