Hey guys,

I recently (October) took a job as a 1099 contracted employee for the first time. I have been a W-2 employee my entire career.

As far as paying taxes goes, I have set aside enough money with every paycheck I get, so that I can pay taxes when it is time to - I have read that I should start paying taxes quartely, but am not sure. Is there a form I just fill out and mail them a check once a quarter?

I have a contract through the end of the 2018 year, where I will then be evaluated to become an "in-house" employee of the same company.


Does anyone have experience with this and can give some pointers?

Quote:

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How Do I File Self-Employment Taxes?
When you prepare your return on efile.com, you will be asked if you own a business or have received a Form 1099-MISC efile it, or a Schedule K-1 efile it. Based on the answers you provide, efile.com will help you report your business income and expenses by providing the forms that you will need and asking for the information that needs to be reported on each form.
A Schedule SE efile it is used to calculate your self-employment tax. We will generate the Schedule SE for you. You can also adjust any of the amounts on your Schedule SE that are automatically calculated if this is necessary.

Do I Have to Pay Estimated Taxes?
If you are self-employed, and you expect to owe $1,000 or more in tax when you file your return, then the IRS requires you to make quarterly estimated tax payments. Estimated tax payments are used to pay income tax and self-employment tax. If you do not pay enough tax through withholding and/or estimated tax payments to cover your tax liability, then you will be charged a small penalty by the IRS. The tax penalty is calculated on your tax return, and added to the amount you owe (or subtracted from your refund).

How Do I Pay Estimated Taxes?
You calculate and make estimated tax payments using Form 1040-ES efile it, which is really a booklet than a form. Use the included worksheet to figure the amount of your estimated tax payments. You don't have to send this worksheet to the IRS, but they recommend that you keep it for your records.
The booklet also contains four payment vouchers, which you can use to make your quarterly payments, if you are paying by check or money order. Just fill out the appropriate voucher and enclose it in the envelope with your check or money order made out to "United States Treasury". You can find the correct mailing address to use on the "Where to File..." chart included in the 1040-ES booklet.
Alternatively, you can make your estimated tax payments electronically online. You can pay online using a credit card, debit card, or electronic funds withdrawal. If you make your payments online, you do not have to mail vouchers to the IRS. To pay online, go to www.irs.gov/epay.
When Do I Pay Estimated Taxes?
You may have to pay estimated income tax four times throughout the year (quarterly) because you do not have taxes withheld from your pay by an employer. The quarterly tax payment periods are in the chart below:
Payment Period : Due Date
January 1 March 31 : April 15
April 1 May 31 : June 15
June 1 August 31 : September 15
September 1 December 31 : January 15 (of the following year)

When Will My Estimated Tax Payment Be Considered on Time If I Mail My Payment?
If you are making an estimated tax payment by mail, your payment will be considered on time if it is postmarked on the due date. If the due date falls on a Saturday, Sunday, or legal holiday, you will be on time if your payment is made on the next business day.

Can I Make More Than Four Estimated Tax Payments Per Year?
Yes, if you want to or need to make the additional payments. Just make a copy of a payment voucher or pay online. However, make sure that you pay enough by each due date to cover the preceding payment period.

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https://www.efile.com/self-employed-independent-contractor-income-estimated-taxes/#self employed taxes

Are you married and is your spouse W2?

One strategy that can work if the above is true and your 1099 income is consistent is to over deduct on your spouses federal withholding instead of paying in quarterly.

Also what are you doing for health insurance ?

If your are truly a 1099 contractor then that opens you up to a wealth of business deductions including health insurance, business mileage, communication expenses, etc. Being that this is new to you it would probably be in your best interest to pay a cpa at least for 1 year to help reduce your tax liability. For a sole prop filing your probably looking at $300-$500.

use Form 1040-ES to make estimates.

4th quarter payment is due 1/15/2018 unless you are in a disaster affected county then 1/31/2018.

As gigemhilo said, all you need to do is print out a 1040-ES. Its just a voucher. Make sure to include your SS# and the tax year to which the payment should be applied on the check in addition to the 1040ES.

Thank you guys,

Quote:

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Are you married and is your spouse W2?

One strategy that can work if the above is true and your 1099 income is consistent is to over deduct on your spouses federal withholding instead of paying in quarterly.

Also what are you doing for health insurance ?

If your are truly a 1099 contractor then that opens you up to a wealth of business deductions including health insurance, business mileage, communication expenses, etc. Being that this is new to you it would probably be in your best interest to pay a cpa at least for 1 year to help reduce your tax liability. For a sole prop filing your probably looking at $300-$500.

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Couple things
- my wife is W2
- I get health insurance, etc, through her company.

I agree that it probably makes sense to pay a professional this year and get some help.

BigPuma said:

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4th quarter payment is due 1/15/2018 unless you are in a disaster affected county then 1/31/2018.

As gigemhilo said, all you need to do is print out a 1040-ES. Its just a voucher. Make sure to include your SS# and the tax year to which the payment should be applied on the check in addition to the 1040ES.

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Does it become more complicated because I was a W2 employee from January - August, then 1099 from October - December?

I'm guessing that I fill out the 1040-ES for Q4, then when I file yearly taxes next April, I just account for that somehow?


Sorry - I've used a "tax guy" my entire adult life, and he passed away a few months back, so I'm flying blind a little bit.

Not really. It just means you will have a W2 with hopefully enough withholding to cover that. And the 1040ES really is just a voucher to send in with a check. You account for the payment on your 1040 when you file. Not really that big of a deal.

If you need a tax guy this year shoot me an email. Or gigemhilo, he is a good guy too.