I made less than $3,000 as a contractor for 2018. Where, how, and when do I pay my single estimated tax payment for said income?

[satterthg]

I expect to owe less than $1,000 in taxes on this 1099-MISC income, and therefore, am not required to make quarterly estimated payments. However, I am unsure of how, when, and where to pay my taxes on the small amount that I did make through my contractor work.

Any help would be greatly appreciated! Thank you!

[fanfare]

it's too late now to make an estimated tax payment for 2018. Estimated tax payments will be for 2019.

[satterthg]

If I didn't make enough to be required to make quarterly estimated payments (say, I owe $350 total for 2018), do you know how I should go about making that payment?

[VolvoGirl]

It will be included in the tax due on your return or reduce your refund. If you have a tax due you can enter your bank info on your return for the IRS to take it out of your account.  Or you can say you will mail a check.  Or pay online at <a rel="nofollow" target="_blank" href="https://www.irs.gov/payments">https://www.irs.gov/payments</a>

[DawnC0 · Accepted solution]

You need to file a 1040 tax return with Schedule C which will include your SE tax by 04/15.  See below for instructions on how to enter your Schedule C for the self-employment income.  

The SE tax is 15.3%.  If this was your only income in 2018, you won't owe any income tax on it.   

To set up your business:

1. Log in and select the Take me to my return button.
2. Search for schedule c and select the Jump to link in the search results.
3. Answer Yes to Did you have any self-employment income or expenses? or Did you have any income and expenses for a business in 2018? and follow the instructions.
4. Once the business is set-up, you can enter your 1099-MISC.
5. If you have expenses related to this income, you will be asked to enter those next. 

File your tax return and pay any tax due by 04/15.  If you have other income, the taxes owed from your self-employment will reduce your refund.  

[Carl]

" If this was your only income in 2018, you won't owe any income tax on it.  "
Just be aware that you will pay the 15.3% SE tab on the amount of that income that exceeds $400.

[satterthg]

Thank you! Could you tell me where you got this information? I'm just curious to know what the income threshold is for who is/isn't required to pay income tax.

[VolvoGirl]

If you have self employment income you have to file a tax return if you have only $400 or more.

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 1040 Schedule 1 line 27.   The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 Schedule 4 line 57 which goes to 1040 line 14.  The SE tax is in addition to your regular income tax on the net profit.

Blank Schedule SE <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/f1040sse.pdf">https://www.irs.gov/pub/irs-pdf/f1040sse.pdf</a>
Schedule SE Instructions  <a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i1040sse.pdf">https://www.irs.gov/pub/irs-pdf/i1040sse.pdf</a>

[VolvoGirl]

See 1040 Instructions Filing Requirements Chart C page 12 #3
<a rel="nofollow" target="_blank" href="https://www.irs.gov/pub/irs-pdf/i1040gi.pdf">https://www.irs.gov/pub/irs-pdf/i1040gi.pdf</a>

[satterthg]

VolvoGirl, so if I file my 2018 tax return here through TurboTax, my SE tax payment will automatically be deducted from my refund? In other words, I no longer need to pay my SE tax to the IRS directly, after submitting my return here?

[VolvoGirl]

Right.  The SE Tax is part of your personal 1040 tax return.  It's included in your ending tax due or refund.  The estimated tax you pay (or you didn't pay) is just like withholding from your paychecks.  

[satterthg]

Oh wow, I had not planned for that! That's a very, very welcome relief. Thank you so much!

[VolvoGirl]

Do you have other income?  The 1,000 tax due to pay estimates is based on all your income not just the self employment 1099Misc income.  

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 0
  100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months.)

To prepare estimates for next year you start with your current return, You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

[Carl]

http://www.irs.com/payments