What are the taxes to comply with preschool?

How exactly do I calculate what to owe for Estimated Taxes this 2011?

• Okay, here’s the situation: I’ve started working freelance for a company that pays $250.00 per assignment. So far this year, I’ve completed three assignments. One was submitted and invoiced either at the end of January or beginning of February, and two others in April (invoiced April 18, 2011), for a total of $750.00. I’ve already taken out $100.00 of every $250.00 (per assignment, for a total of $300.00) I’ve made and set it aside for taxes. Now, I realize I’m already late for the Estimated Taxes first quarter April 15 due date and that there will be penalties, interest, and fines, to pay. Also, I’ve been reading on the IRS web site, and on here, about Schedule ES and how to estimate what I’ll owe in self-employment taxes (medicare and social security taxes, etc.), but the more I read, the more confused I get. One answer I read on here about Estimated Taxes said that if total estimated taxes owed was less than $1000.00, that there wouldn’t be anything to pay, so once again, I’m confused. I’m assuming I pay, but I don’t know what forms to fill out (including any penalty forms) and for how much. Also, here was a web site offered by the IRS to make federal payments (I’m assuming this is for Estimated Taxes): http://www.irs.gov/efile/article/0,,id=98005,00.html So, the bottom line (so far this year): $750.00 earned in freelance from January to April 18, 2011 $300.00 has been set aside for taxes (income, medicare, social security, any penalties, etc.) Do I owe? How do I calculate what I owe? What forms to fill out or can the federal taxes be paid online? Any feedback would be appreciated, thank you!

• Answer:

  $750 from 1/1 to April 18 is less than $250 per month. If you continue making money at that low rate, then you will make less than $3000 by the end of the year. If this is your only income for the year, then you do not have to pay estimated taxes, and there will be no penalties or interest if you file your taxes on time (by April 15, 2012). You must file however. File Form 1040, Schedule SE, and either Schedule C or Schedule C-EZ. Do not do this until after December 31. If you also have other income (like a regular job), then do the following: 1. Take the amount of freelance income for January 1 to March 31. Multiply by 4 for an estimate of the amount you will get by the end of the year. Multiply the result by 0.9235. Multiply the result by 15.3%. The final result (freelance income for 3 months * 4 * 0.9235 * 15.3%) is your estimated self-employment tax for the year. 2. Take the total amount of taxable income (freelance, regualar job, investments, etc.) for January 1 to March 31. Multiply by 4 for an estimate of the amount you will get by the end of the year. Subtract 1/2 of the estimated self-employment tax for the year. This is your estimated AGI for the year. Subtract the standard deduction and exemptions (if you do not know the correct amounts to subtract, then subtract a total of $9400, which is a reasonable estimate of standard deduction and exemptoins). Whatever is left is your estimated taxable income. Using the table in the instructions for Form 1040-ES, calculate the income tax for this taxable income. 3. Add the income tax calculated in step 2 and the self-employment tax calculated in step 1. 4. Multiply this sum by 0.225. 5. If you had a regular job where federal income tax was withheld from your pay, then subtract the federal income tax that was withheld from your pay from January 1 to April 15. 6. If you had a regular job, pay the amount calculated in step 5. If not, pay the amount calculated in step 4. Between June 1 and June 15, repeat these steps, with the following changes: Instead of using income up to March 31, use income up to May 31. Instead of multiplying by 4, multiply by 2.4 Instead of multiplying by 0.225, multiply by 0.45. Instead of using withholding up to April 15, use withholding up to June 15. In step 4 or 5, you are calculating the total that has to be paid by June 15. In step 6, subtract the amount already paid and pay whatever is left. Between September 1 and September 15, repeat these steps, with the following changes: Instead of using income up to March 31, use income up to August 31. Instead of multiplying by 4, multiply by 1.333 Instead of multiplying by 0.225, multiply by 0.675. Instead of using withholding up to April 15, use withholding up to September 15. In step 4 or 5, you are calculating the total that has to be paid by September 15. In step 6, subtract the amount already paid and pay whatever is left. Between January 1 and January 15, repeat these steps, with the following changes: Instead of using income up to March 31, use income up to December 31. Do not multiply by 4, 2.4, or 1.333. (If you want to multiply, multiply by 1.) Instead of multiplying by 0.225, multiply by 0.9. Instead of using withholding up to April 15, use withholding up to December 31. In step 4 or 5, you are calculating the total that has to be paid by January 15. In step 6, subtract the amount already paid and pay whatever is left. Between January 1 and April 15, file Form 1040, Schedule SE, and either Schedule C or Schedule C-EZ. Do not do this until after December 31.