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Yes, you should make estimated payments this year or you will owe on your next tax return. You can figure the amount and print the vouchers in your TurboTax program.
Here is how to find it:
Thanks for step by step instruction. 2 questions:
1) I do that after I file for 2021, right? (not later then April 15th)
2) I can only print vouchers or I can also make payments through TurboTax?
Thanks
No you should do it before you file to avoid paying estimated tax penalties. To avoid the penalty you need to make this payment. Please refer to this IRS website for additional details including where to mail the voucher. Use print voucher 4 dated 01/15/2021. You have two days to complete this.
[ Edited 01/13/22|01:35 PM PST]
Here's some general info on self employment income.
To report your self employment income you will fill out schedule C in your personal 1040 tax return and pay SE self employment Tax. Here's a Schedule C https://www.irs.gov/pub/irs-pdf/f1040sc.pdf
You can enter Self Employment Income into Online Deluxe or Premier but if you have any expenses you will have to upgrade to the Self Employed version or use any of the Desktop CD/Download programs.
How to enter self employment income
For the future, you should use a program like Quicken or QuickBooks to track your income and expenses. There is a QuickBooks Self Employment bundle you can check out which includes one Turbo Tax Online Self Employed return....
http://quickbooks.intuit.com/self-employed
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 and if you don't get the 1099NEC.
You use your own records. You are considered self employed and have to fill out a schedule C for business income. You use your own name, address and ssn or business name and EIN if you have one. You should say you use the Cash Accounting Method and all income is At Risk.
After it asks if you received any 1099Misc or 1099NEC it will ask if you had any income not reported on a 1099Misc. You should be keeping your own records. Just go through the interview and answer the questions. Then you will enter your expenses.
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.
The SE tax is already included in your tax due or reduced your refund. It is on the 1040 Schedule 2 line 4 which goes to 1040 line 15. The SE tax is in addition to your regular income tax on the net profit. You do get to take off the 50% ER portion of the SE tax as an adjustment on 1040 Schedule 1 line 14 which flows to 1040 line 8a. Turbo Tax automatically calculates the SE Tax and Adjustment.
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
Publication 463 for Travel, Gift & Car expenses
https://www.irs.gov/pub/irs-pdf/p463.pdf
QUARTERLY ESTIMATES
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.)
For 2021 estimates.......
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.
Here are the blank Estimates and instructions…..
http://www.irs.gov/pub/irs-pdf/f1040es.pdf
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 Estimate
I don't think I have due payment on 15th of January 15th 2022 . It is the 4th payment for 2021 fiscal year, and as mentioned, for 2021 I started in October so, there was no estimate of 1k in taxes, so my concern in 2022. As I understand my next payment is on April 15th.
My intention is to do taxes for 2021 and after that, to use the CD Personal and business, that I have, to do estimates for quarterly pay for 2022.
Thanks
Right. You probably don't need to make a 2021 4th quarter estimate payment.
For 2022, Using your 2021 program 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 (Home&Business version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button
Say No to W4. When you get to the W4 and Estimated Taxes section, say you want to adjust your income to go though all the screens.
Here are the blank Estimates and instructions…..
https://www.irs.gov/pub/irs-pdf/f1040es.pdf
Or you can pay on the IRS website. Be sure to pick 2022 1040ES payment
https://www.irs.gov/payments
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