1099 Employee

[maddydamon]

I just started my first full-time job as a 1099-NEC employee. I am trying to understand what to expect for my taxes. What is quarterly filing? Is that an option to pay your taxes quarterly rather than once a year so that the taxes due don't add up as much, or is it a requirement? If I started my job full-time on 8/19, but have been working part-time all year, when would I start paying these quarterly taxes? 

[VolvoGirl]

Basically yes so you don't owe so much when you file your Tax Return in April.

You should send in quarterly estimated payments to cover the income tax and self employment tax (FICA).

For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

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.)

The 1040ES quarterly estimates are due April 15, June 17, Sept 16 and Jan 15, 2025. Your state will also have their own estimate forms.

How to make the Estimated payments
https://ttlc.intuit.com/community/tax-payments/help/how-do-i-make-estimated-tax-payments/00/25875

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 2024 1040ES payment
https://www.irs.gov/payments

If you don't pay estimates and owe too much on your tax return you might have a penalty.  For a underpayment Penalty, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

And by the way you are not an employee.  You are an Independent Contractor and the people who pay you are your customers and clients.  

[marctu]

So when you are working as a contractor and your end of the year tax document is a 1099-NEC you are not an employee.  An employee receives a W-2, and taxes are withheld from their paycheck.  When you are paid as a contractor no taxes are withheld. 

When you are a contractor you are Self-Employed ("SE")  and  you are responsible for paying SE tax, which is 15.3% of 92.35% of SE net income as well as any income tax liability.  Net income is your gross income less your expenses.   You usually must pay SE tax if you had net earnings from self-employment of $400 or more. 

You are starting at the end of the third quarter, so most of your SE net income would be in the fourth quarter, which begins September 1.   You can use this to track your expenses: Track self-employed expenses year-round with TurboTax Expense Monitor 

You will also need to consider the tax brackets as well.

2024 Filing Status: Single, Married Filing Jointly (MFJ), and Qualifying Surviving Spouse (QSS)

Tax Rate	Single Taxable Income Range (2024)	MFJ and QSS Taxable Income Range (2024)
10%	Not over $11,600	Not over $23,200
12%	Over $11,600 but not over $47,150	Over $23,200 but not over $94,300
22%	Over $47,150 but not over $100,525	Over $94,300 but not over $201,050
24%	Over $100,525 but not over $191,950	Over $201,050 but not over $383,900
32%	Over $191,950 but not over $243,725	Over $383,900 but not over $487,450
35%	Over $243,725 but not over $609,350	Over $487,450 but not over $731,200
37%	Over $609,350	Over $731,200

2024 Filing Status: Head of Household (HOH) and Married Filing Separately (MFS)

Tax Rate	HOH Taxable Income Range (2024)	MFS Taxable Income Range (2024)
10%	Not over $16,550	Not over $11,600
12%	Over $16,550 but not over $63,100	Over $11,600 but not over $47,150
22%	Over $63,100 but not over $100,500	Over $47,150 but not over $100,525
24%	Over $100,500 but not over $191,950	Over $100,525 but not over $191,950
32%	Over $191,950 but not over $243,700	Over $191,950 but not over $243,725
35%	Over $243,700 but not over $609,350	Over $243,725 but not over $365,600
37%	Over $609,350	Over $365,600

If your filing status is single the standard deduction would be $14,600 for tax year 2024.  If you're the head of your household, it's $21,900 , and if Married Filing Jointly it is $29,200. 

You can use this tool to help you as well: Tax Caster 

To make estimated tax payments go here: Direct Pay with bank account 

Thank you so much for your question  @maddydamon 

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Client