Tax Year Prior to 2020: How do I file my 2017 quarterly taxes

[jessie1996j]

Hi I don't have a 1099 and I don't think I will be getting one until the end of the year. I am new to being self employed and i started just after the 1st quarterly filing but I plan on filing for the  2nd quarterly. How can I  file this using turbo tax? Can I file without having a 1099? Also if I waited until the end of the year to file would I face extra fees? Appreciate any help you can offer!

[Carl]

Welcome to the world of self-employment. Been self-employed myself for just over 12 years now, and love it. The TurboTax software does not handle quarterly tax payments at all. The program is designed and intended for the sole purpose of filing yearly tax returns, and that's it. For your quarterly taxes you have two choices.

1. You can go to https://www.irs.gov/pub/irs-pdf/f1040es.pdf and print out the instructions and forms there. It's the whole package you need for your 2017 quarterly taxes. The payment vouchers are at the end of that document. As for the instructions, it's just my personal opinion, but they're a waste of your time. If you just send in at least 20% of your gross business income each quarter, you'll be fine.

2. Your second option is to just pay online each quarter at http://www.irs.gov/directpay. Select the "Estimated Tax" option, then select 1040-ES quarterly taxes option and go from there. If you pay online, make sure you print out your receipt. If the IRS claims you didn't pay and you don't have a receipt then the bottom line is, you did not pay.

If you don't pay quarterly taxes, then when you file your return at tax time you will be assessed a penalty for not doing so. Additionally, don't underpay your quarterly taxes either. If you do, and if what you owe at tax time is more than 10% of your total tax liability, then you'll be assessed an underpayment penalty.

If you just send in no less than 20% of your gross business earnings each quarter, you'll find in the end that you may have actually overpaid, thus resulting in a refund. (which is a good thing). After that first year of business you'll have a better idea of just what you need to pay each quarter from that point forward, based on your business income of course. Hopefully, it increases year to year. Just compensate your quarterly tax payments accordingly and you'll be fine.

[jessie1996j]

Thank you this is so helpful! one other question I had is how to apply my deductions? since its an at home business. can I do that quarterly as well or does that come at the end of the year?

[Carl]

Apply your deductions to what? If you're referring to when you file your yearly tax return, the program will ask you for Estimates and Other Taxes Paid.

[VolvoGirl]

When you file your regular personal return next April you will fill out schedule C for self employment income.

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 line 27 of the 1040.  The SE tax is already included in your tax due or reduced your refund.  It is on the 1040 line 57.  The SE tax is in addition to your regular income tax on the net profit.

Here is some IRS reading material……

IRS information on Self Employment
<a rel="nofollow" target="_blank" href="http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Self-Employed-Individuals-Tax-Center"...>

Pulication 334, Tax Guide for Small Business
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p334.pdf">http://www.irs.gov/pub/irs-pdf/p334.pdf</a>

Publication 535 Business Expenses
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/p535.pdf">http://www.irs.gov/pub/irs-pdf/p535.pdf</a>

[VolvoGirl]

FOR 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.)

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.

Or Go to….
Federal Taxes or Personal (H&B/Self Employed version)
Other Tax Situations
Other Tax Forms
Form W-4 and Estimated Taxes - Click the Start or Update button

If you can't get back into your return try this, On the Tax Timeline page you have to select Add A State to get back into your return.

Here are the blank Estimates and instructions…..
<a rel="nofollow" target="_blank" href="http://www.irs.gov/pub/irs-pdf/f1040es.pdf">http://www.irs.gov/pub/irs-pdf/f1040es.pdf</a>

The 1040ES quarterly estimates are due April 18, 2017, June 15, Sept 15 and Jan 16, 2018.  Your state will also have their own estimate forms.

[Carolyn4]

Thank you so much for the helpful information! I really like how your answer was straight to the point and that you provided links for us to not also understand the process, but also to actually DO IT.

Would you suggest actually filling out and mailing in a 1040ES with check? Or is option #2 for IRS direct pay essentially just the same thing but more convenient since it's online?

[VolvoGirl]

you can pay directly on the IRS website <a rel="nofollow" target="_blank" href="https://www.irs.gov/payments">https://www.irs.gov/payments</a>
Be sure to pick the right kind of payment and year.....2018 Estimate

[Carolyn4]

@VolvoGirl thank you so much!

[fgbowen]

Very helpful answer.

I have another question.

If I file quarterly as you say - What about deductions?

What about business Mileage, and Mileage Apps like STRIDE?

STRIDE provides reports of business Mileage, and other expenses.

I'm guessing the IRS provides ways to connect Mileage reports and deduction proofs with their quarterly filing forms - Correct?

[Carl]

Understand that you only "FILE" a tax return once a year. That's it. But for a business you have to "PAY" taxes each quarter. You don't "FILE" any kind of a return when you "PAY" your quarterly taxes. Then like I said earlier, if you send the IRS 20% of your ***GROSS*** business earnings each quarter, come tax "FILING" time you'll be fine. You deal with business expenses and other deductions at tax "FILING" time.

Basically, if at tax "FILING" time so long as what you owe the IRS *AT THAT TIME* is less than $1000 or less than 10% of your total tax liability (whichever is *higher*) then no underpayment penalty is assessed. But if at tax "FILING" time if what you owe the IRS exceeds $1000 or 10% of your total tax liability (again, whichever is *higher*) then you will be assessed an underpayment penalty for underpaying your quarterly taxes.

THat's why I use the magic number of 20%. So long as your withholding on any other W-2 income is sufficient to take care of the liability on that other W-2 income, my recommended percentages will suffice just fine.

[Karakaay]

@Carl My husband and one other person have recently formed a multi member LLC. I understand paying quarterly taxes through the IRS website.

My question is if Turbotax will help with preparing k1's for my husband and his partner to use when filing their person taxes at the end of the year. 

And if so, is that essentially all they will need for the business at tax filing time. 

[Carl]

@Karakaay 

For a multi-member LLC/Partnership, while it's still considered a disregarded entity, that type of business entity must complete it's own physically separate IRS Form 1065 Partnership tax return. For doing this it requires that you purchase a completely separate program called TurboTax Business. This is *NOT* Home and Business.

TurboTax Business is for the windows operating system only. It is not available for MAC and it is not available as an online product.

With TurboTax Business you will prepare and file the 1065 partnership return. With that same program a K-1 will be issued to each owner of the business and each owner will need their own K-1 in order to complete their personal 1040 tax return. So you can't even start the personal 1040 return until you have completed and filed the 1065 partnership return and all K-1's have been issued.

Also be aware that the 1065 Partnership return is due March 15 - a full month before the personal 1040 return filing deadline. Filing a partnership return late will be costly. It's $200 per month, per partner for each month late. So with two partners if you file on March 16th, the late filing penalty will be $400. Just be aware of this stuff.

You can purchase TurboTax Business 2019 at https://turbotax.intuit.com/small-business-taxes/  After you pay for it, you can download the CD installation file and install it on a *WINDOWS* computer immediately. If you also want to be sent the physical CD (which I recommend) then pay attention during the purchase process so you can indicate that you also want the physical CD mailed to you.

[JulieC14]

The TurboTax Business software will prepare the Form 1065 form as well as the K-1 forms for each member of the LLC.

Here is a link to the TurboTax Business  product:  TurboTax Business

[Karakaay]

@Carl ok thank you. Will the Home and Business product not work? It says online that form 1065 is included in that product. I just want to be sure so I don't waste money on something that won't work. I only have a Mac, so I'm weighing my options of just hiring someone to do it for me.