I'm a freelancer, and my taxes are a combination of several 1099s. I've been told it might be in my interest to do quarterly taxes instead? I don't even know how to begin with this? Any insight?
Yes, you will need to 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.
The 1040ES quarterly estimates are due April 18, June 15, Sept 15 and Jan 16, 2024. Your state will also have their own estimate forms.
How to make the Estimated payments
Here are the blank Estimates and instructions…..
Or you can pay on the IRS website. Be sure to pick 2023 1040ES payment
To prepare estimates for next year you need to be in your current return. If you can't get your return open, Try this, you can sign back onto your account, click on Add a State. This should get you back into your return. Be very careful not to change anything in your actual return.
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.
TIP - If you didn't owe or missed making the prior quarterly estimated payments and need to just calculate starting now, you can go though the Estimated Taxes section and just put $1 (one dollar) in for the quarters you missed. Then it will only figure the current and remaining quarters.
Some general info on self employment on Schedule C.......
You will need to keep good records. You may get a 1099NEC or 1099K 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....
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.
Turbo Tax Beginners Tax Guide for the Self Employed
What is form 1099NEC?
Here is some IRS reading material……
IRS information on Self Employment
Publication 334, Tax Guide for Small Business
Publication 535 Business Expenses
I've been told it might be in my interest to do quarterly taxes instead?
Instead of what? Making quarterly estimated tax payments is not a substitute for filing a tax return at the end of the year. You don't file a quarterly tax return. You just make a payment. The quarterly payments are advance payments towards the total tax on the tax return that you file at the end of the year. The payments are a substitute for the tax that would be withheld from your paychecks if you were an employee.
Since you don't have withholding taken out of the 1099 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
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).
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