Recently started working at a local downtown shop. They pay me via written checks; I don't get a W-2 or anything. How exactly do I report (and pay for) this income?

[IsabellaG · Accepted solution]

You would need to report this as if you are self-employed, unless you wish to have the IRS contact your employer and require them to treat you as an employee, with a W-2.

In TurboTax Self-Employed, you would report this as General Business Income. You'll have to pay both income tax and Self-Employment tax (Social Security and Medicare)  on this income. See the screenshot below.

[mst87]

Thank you for the clarification. Do I wait to pay these taxes during the 2018 tax season (when I file for this year's 2017 total earnings), or do I have to start paying for this year quarterly as I go along? And if so, can TurboTax help me with figuring out the percentages I need to pay? (for both self employment and income taxes)

[IsabellaG]

Yes, you should make quarterly payments, called estimated tax payments. You can figure out (estimate) how much to pay in TurboTax Self-Employed, by going to the Personal Tab, then choosing Other Tax Situations, then scrolling down to Other Tax Forms and choosing Form W-4 and estimated taxes. You don't want to work on a W-4, but you do want to work on estimated taxes. It takes a little time to enter this information, so be patient. You can then print out 4 Forms 1040-ES to make quarterly payments. You can also make payments to the IRS electronically each quarter.

[mst87]

I went through it and entered my estimated earnings for the rest of this year. The results say that I don't need to make estimated tax payments in 2017. Is there a threshold amount you have to owe in order to even need to pay it?

[IsabellaG]

Yes, you can make payments of any amount, but you can be subject to a penalty if you wind up owing $1000 or more in taxes. If you already have withholding that covers your taxes,you might not need to do it.  Here's a link to more information: <a rel="nofollow" target="_blank" href="https://www.irs.gov/taxtopics/tc306.html">https://www.irs.gov/taxtopics/tc306.html</a>