I am trying to confirm whether I have to do the Self-Employed Quarterly Tax Filing. I did not owe any taxes for 2022, but I started to work as a self-employed consultant for a manufacturer in September 2022. That is my only employment for 2023 thus far. From September 2022, I continued to get paid severance by my former employer through April 2023. Because I did not owe any taxes for 2022 and did receive a big refund, I have not started the Quarterly Tax Filing for 2023. Please advise.
Before you can determine if you are subject to self-employment tax and income tax, you must figure your net profit or net loss from your business. You do this by subtracting your business expenses from your business income. If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040 or 1040-SR. If your expenses are more than your income, the difference is a net loss. You usually can deduct your loss from gross income on page 1 of Form 1040 or 1040-SR. But in some situations your loss is limited.
You have to file an income tax return if your net earnings from self-employment were $400 or more. If your net earnings from self-employment were less than $400, you still have to file an income tax return if you meet any other filing requirements
Estimated tax is the method used to pay Social Security and Medicare taxes and income tax, because you do not have an employer withholding these taxes for you. Form 1040-ES is used to figure these taxes. Form 1040-ES contains a worksheet that is similar to Form 1040 or 1040-SR. You will need your prior year’s annual tax return in order to fill out Form 1040-ES. Use the worksheet found in Form 1040-ES, Estimated Tax for Individuals to find out if you are required to file quarterly estimated tax.
If you're self-employed, you pay the combined employee and employer amount. This amount is a 12.4% Social Security tax on your net earnings and a 2.9% Medicare tax on your entire net earnings.
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Thanks, but I read on the IRS site that if you did not owe any federal taxes in the prior year, you don't have for file quarterly estimated taxes for the current year. Maybe it's just an interpretation error, I'm not sure.
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