Quarterly Estimated Taxes Question

[marie8]

Hello! I've been using Turbo Tax for a number of years and have been employed by companies usually; now for the last two years being a mix of freelancer/employed. I haven't made enough to worry about quarterly, but my estimate for what I will make through the year of 2022 (as just a freelancer), might warrant quarterly filing.

But I'm so confused, I paid in full all I owed for 2021.

Do I pay quarterly taxes for what I earn in 2022, during the year of 2022? 

Or 2023? 

Can I also pay quarterly as a mix of two 'industries'? I'm a sole proprietor who does dog walking and graphic design to get by. 

Thank you!

[Bsch4477]

You pay quarterly payments based on your total expected income for 2022. Payments for 2022 are due in mid April, June and September of 2022 and January of 2023. See this download for forms and information. 

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

[VolvoGirl]

You pay estimates based on all your income combined minus any withholding.   You pay estimates during the year for the year.  So you already missed the first quarter.

Estimates are to cover the self employment tax.  You pay Self Employment tax (Scheduled SE) on a Net Profit of $400 or more on Schedule C.  You pay 15.3% SE tax on 92.35% of your Net Profit (If it is 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.  

To prepare estimates for next year you start with your current return, but be careful not to change anything.  If you can't get back into your return, Click on Add a State to let you back into your retun.

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.

Or Go to….

Federal Taxes or Personal (Deskop H&B)

Other Tax Situations

Other Tax Forms

Form W-4 and Estimated Taxes - Click the Start or Update button

See,

https://ttlc.intuit.com/community/tax-payments/help/can-turbotax-calculate-next-year-s-federal-estim...

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).

The 1040ES quarterly estimates are due April 18  June 15, Sept 15 and Jan 17, 2023.  Your state will also have their own estimate forms.

Here are the blank Estimates and instructions (the actual 1040ES forms are at the very bottom so scroll way down)

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

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

Be sure to pick the right kind of payment and year.....2022 Estimate

[marie8]

Thank you so much!

[marie8]

I really appreciate this info, thank you. I didn't really start seeing an increase in income until after the first deadline, will I be penalized for that?

[VolvoGirl]

Nope.  It's based on when you get the income.

[dmertz]

However, to base it on when you receive the income instead of treating the income as received uniformly throughout the year, you'll need to prepare and file Schedule AI of Form 2210 which is quite complicated.

One of the safe harbors is that estimated tax payments don't need to be any more that necessary to avoid a penalty based on your previous year's tax liability (or for those with a higher AGI, 110% of that amount).  If you paid no withholding or estimated taxes for 2021 and had no penalty, then you would not have a penalty for 2022 but with sufficient income in 2022 this could would be a concern for 2023.  I myself make the estimated tax payments for early quarters based on the previous year's income even if I expect most of my income to come later in the year, then adjust my estimated tax payments for the later quarters downward if I've already paid enough for the year.  The last payment for the year is due January 15 of the following year (or January 31 if by January 31 you file your tax return and pay nay balance due), so you have a few weeks after the end of the year to determine how much your Q4 estimated tax payment needs to be to get close to covering your total tax liability

[Critter-3]

The online program is closed for the switch to the next tax year so opening up the 2021 online program is no longer an option.  

[marie8]

Gotcha! Thank you guys for your help, I really appreciate it 🙂