Quarterly Taxes and Work at Home Leads  

Posted by: TRochelle in , , , , , , , , ,

Welcome everyone, its "Tea Time"! Many of the newer work at home individuals are not bothered by today being the dreaded APRIL 15th but some of us vets have waited until the absolute last second. I, for one, am not one of those people. I try and balance myself out to where I do not owe at the end of the year but its starting to look like the best way to balance my taxes is by making estimated tax payments to cover the next year's tax liability.

That sounds technical but believe me, sounding that way is as technical as it gets. When you are self employed or you are considered an independent contractor it is important that you estimate both your income tax as well as your self employment tax. To do this, divide your income tax (Line 43 on Form 1040) by your adjusted gross income (Line 73 on Form 1040). Your result will be your average tax rate. Add your average tax rate to the standard self-employment tax rate of 15.3%. To configure your estimated taxes, multiply the percentage by your quarterly net profit.

To find out if you are actually liable for taxes, look at your total tax (found on Form 1040, Line 62) and subtract that amount from your total withholding (found on Form 1040, Line 63). The total is your total unpaid tax liability.

This amount is best paid monthly, but if you prefer to pay quarterly, divide that total by four to see how much you should pay quarterly. Should you choose to pay monthly, divide that total by twelve.

Monthly is much better because the payment system will allow recurring payments. If you have a payment due, you can make payments online via the Electronic Federal Tax Payment System. Should you decide to mail your payments instead, use a Form 1040-ES.

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This entry was posted on Wednesday, April 15, 2009 and is filed under , , , , , , , , , . You can leave a response and follow any responses to this entry through the Subscribe to: Post Comments (Atom) .


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