How and when do I pay estimated taxes at the federal and state levels?
-
I've just started working as an independent contractor. I understand I need to file the Form 1040ES at the federal level on a quarterly basis. However, I'm not certain how to handle my California state taxes. Do I use the Form 540ES and quarterly? Thanks.
-
Answer:
Yes California estimated taxes are paid using form 540ES and are due on the same dates as the federal estimates.
Wray Rives at Quora Visit the source
Other answers
Federal Estimated Tax is paid with form 1040-ES. You would compute the amount of tax you think you owe, less any withholding on W-2 jobs that you expect. There is a booklet and worksheet to help you figure out whether to pay based on this year's expected tax hit or last year's actual tax liability. Then you would take the amount you owe and pay 1/4 of it each quarter. Note that the government defines its "quarters" differently from what you might expect.1st quarter is due on April 15 (often 1-3 days later due to a holiday in Washington DC--this year it's due April 18)2nd quarter is due on June 15 (!)3rd quarter is due on September 154th quarter is due on January 15 of next year (sometimes 1-3 days later depending on MLK day)California has a similar form, the 540-ES. However, California has an unpleasant twist in its estimated tax. This was enacted several years ago during some budget crises, but it is encoded in the law and has not been reset. The quarterly due dates are generally the same as Federal law, but the amount is not 1/4 each time. Instead, you pay:30% of the amount you owe on April 1540% of the amount you owe on June 150% (zero!) on September 1530% of the amount you owe on January 15 of next year.Because governments use cash accounting and the California fiscal year ends June 30, having you pay 70% of your total estimated tax brings income forward for the state. Of course, doing this requires taxpayers to dip into their own cash reserves to pay 70% of their expected tax when they may well have earned less than 50% of their potential income.There is a complicated method of figuring your estimated tax that tracks when the actual income was earned and the actual tax was paid. If your income is highly uneven, this may be advantageous, especially if you earn a lot in the second half of the year. Otherwise, paying the required installments based on one of the methods using current year or last year is simpler.
Michael Mathews
https://www.mileiq.com/blog/tax-planning-for-self-employed/I think the answers here and this easy-to-read guide should help.
Marin Perez
Related Q & A:
- How and when should I plant Poppies?Best solution by gardeningknowhow.com
- How do I deal with taxes?Best solution by Yahoo! Answers
- When will I get my Federal tax return?Best solution by Yahoo! Answers
- How can I get a job in the Federal Government?Best solution by publications.usa.gov
- How and when can i apply to American universities?Best solution by Yahoo! Answers
Just Added Q & A:
- How many active mobile subscribers are there in China?Best solution by Quora
- How to find the right vacation?Best solution by bookit.com
- How To Make Your Own Primer?Best solution by thekrazycouponlady.com
- How do you get the domain & range?Best solution by ChaCha
- How do you open pop up blockers?Best solution by Yahoo! Answers
For every problem there is a solution! Proved by Solucija.
-
Got an issue and looking for advice?
-
Ask Solucija to search every corner of the Web for help.
-
Get workable solutions and helpful tips in a moment.
Just ask Solucija about an issue you face and immediately get a list of ready solutions, answers and tips from other Internet users. We always provide the most suitable and complete answer to your question at the top, along with a few good alternatives below.