New contractor job this year, do I need to start making estimated payments?

[cmiari]

I just started a contractor/self-employed position in February 2022. For the 2021 tax year, I didn't make enough income to owe money on my federal tax return so I'm running into trouble now when I try to calculate my estimated quarterly payments for taxes on form 1040-ES. Based on form 1040-ES, I owe $0 for my estimated quarterly payments because of my income last year. But I have a feeling that's not probably not correct. Should I just send the IRS estimated quarterly tax payments based on the amount I'd pay if I'd had this job for a full year already?

[KarenL]

Estimated taxes can get a bit tricky!  The short answer is yes, pay estimated taxes.  You should, at a minimum, pay the total tax liability you had on the prior year tax returns.  This will help reduce or avoid underpayment penalties.

That said, a simple way to estimate how much you might owe on the self-employment part is to start with your net profit.  That's the total of all of your gross receipts for your business, minus your business expenses. 

Then multiply that number by both the self-employment tax rate of 15.3% and your ordinary income tax rate.  You can look at these tables to get an idea of where you might fall (for ordinary income tax rates) in relation to your expected income and filing status (Single vs. Married Filing Jointly, etc.).  Finally, add those two numbers together.