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wwraja
New Member

I am married and file join return. My wife as 1099 contractor this year 2021. She did not pay any estimated tax in 2021. Can we just pay lumpsom taxes before year end?

Ofcourse without penalty.  If it matters, Our AGI last year was over $150,000 and we got  around $3000 for 2020 due to overpaid taxes.
4 Replies
VolvoGirl
Level 15

I am married and file join return. My wife as 1099 contractor this year 2021. She did not pay any estimated tax in 2021. Can we just pay lumpsom taxes before year end?

You can send in an estimated payment now to help cover the tax due.

 

Here are the blank Estimates and instructions…..

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

 

The 1040ES quarterly estimates are due April 15, 2021, June 15, Sept 15 and Jan 18, 2022.   Your state will also have their own estimate forms.

 

Or you can pay directly on the IRS website https://www.irs.gov/payments

Be sure to pick the right kind of payment and year.....2021 Estimat

 

VolvoGirl
Level 15

I am married and file join return. My wife as 1099 contractor this year 2021. She did not pay any estimated tax in 2021. Can we just pay lumpsom taxes before year end?

Is she new to self employment?  

Some general info on self employment...........

You will need to keep good records.  You may get a 1099NEC 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 track 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....

http://quickbooks.intuit.com/self-employed

 

When you are self employed you are in business for yourself and the person or company that pays you is your customer or client.

 

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.

 

Here is some IRS reading material……

 

IRS information on Self Employment

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center

 

Pulication 334, Tax Guide for Small Business

http://www.irs.gov/pub/irs-pdf/p334.pdf

 

Publication 535 Business Expenses

http://www.irs.gov/pub/irs-pdf/p535.pdf

 

You pay Self Employment tax on $400 or more of net profit from self-employment in addition to any regular income tax.  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.  

Mike9241
Level 15

I am married and file join return. My wife as 1099 contractor this year 2021. She did not pay any estimated tax in 2021. Can we just pay lumpsom taxes before year end?

There will be no federal penalties for not paying in enough taxes during the year: 

  • if withholding and timely estimated tax payments equal or exceed 90% of your 2021 tax

or

  • if withholding and timely estimated tax payments equal or exceed 110% of your 2020 tax

or

  • the balance due after subtracting taxes withheld from 90% of your 2021 tax is less than $1,000

state laws differ

 

 

 

Opus 17
Level 15

I am married and file join return. My wife as 1099 contractor this year 2021. She did not pay any estimated tax in 2021. Can we just pay lumpsom taxes before year end?

The income tax system is supposed to be pay as you go, and she is required to make estimated tax payments on a quarterly basis.  For income earned from January to March, the payment is due April 15. For income earned in April and May, the payment is due June 15. For income earned June through August, the payment is due September 15. And for income earned September through December, the payment is due January 15. (These are the right dates even though they are not exact quarters.)

 

Although there is a technical requirement to pay estimated payments, no penalty will be assessed as long as the total tax paid into the system for you and your wife on your joint return meets the conditions outlined by @Mike9241 . You can pay into the system by making estimated payments at the IRS web site, or by having more tax withheld from your W-2 jobs.  The IRS doesn't care how you pay as long as you pay.  If you over-pay your estimated taxes, the excess will be refunded when you file your tax return. 

 

If you owe more than those amounts, you can be assessed a penalty for underpayment even if you pay in full when you file your tax return.

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

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