If you started self-employment in the middle of the year and you were employed for the other half or you expect to owe less than $1,000 in taxes, you do not have to make estimated payments. In order to make estimated payments will need to have a good estimate of your income and deductions for that year to be able to calculate. See, how to figure what you owe below. The title is also a hyperlink to the entire article you can read for more information.
How you Should Figure What You Owe
You need to come up with a good estimate of the income and deductions you will report on your federal tax return.
You can use TurboTax tax preparation software to do the calculations for you, or get a copy of the worksheet accompanying Form 1040-ES and work your way through it. Either way, you'll need some items so you can plan what your estimated tax payments should be:
- Your previous year's return. Use your previous year's federal tax return as a check to make sure you include all the income and deductions you expect to take on your current year's tax return. You should also look at the total tax you paid if you are going to base your estimated tax payments on 100 or 110 percent of your previous year's taxes.
- Your record of any estimated tax payments you've already made for the year. You need to take those payments into account when you determine how much tax you still owe, so have your check register handy to look up the amounts and the dates you paid.
The deadlines for sending in Estimated Payments are attached below copied from IRS publication 1040 estimated tax payments page 2. These dates change every year so use the website to keep updated.
As a new business owner, I would like to let you know of a great IRS tool to learn more of your responsibilities as you begin your business, it is the IRS Virtual Workshop, here you will find several IRS videos to help you on your journey. Congratulations.
