1099 quarterly taxes

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PeterParker
Posts: 187
Joined: Sun Mar 17, 2013 2:19 pm

1099 quarterly taxes

Post by PeterParker »

Hey there--

I'm a w2 employee for my day job.
I recently (couple months ago) started moonlighting at a 1099 consultant for another place. Probably make $1000-$3000 a month from that.

Anyway I heard there is "safe harbor" as long as you withhold at least 100% of last year's (2020s) income --- which I will be doing automatically, unless I get fired from my day job or something, which is always possible of course.

By that logic, since it's my first year, I don't have to make any quarterly tax payments beyond my typical income w2 (the tax with-holdings are higher than last year with my w2 alone).

But ... I guess since I COULD get fired --- unlikely but --- maybe I should make quarterly payments anyway?
I found the 1040 ES ... which tries to make things "easy" by overcomplicating them, obviously.

ANYWAY --- let's say I have my total self-employment net income for Q2. It's $2000. No expenses.

It looks like part 1 "self employment tax" is simply Self Employment Income ($2000) x 92.35% (what is this??) -- and then multiply that by (2.9% medicare and 12.4% social security) -- (I'm not near $142,000 total income). That part I got. That should shake out to $282.59. So that I understand. Medicare and SS. I don't get the 92.35% part but okay.

The rest of the form seems to overcomplicate matters. It wants you to estimate your AGI from other income sources and deductions and blah blah BLAH. Basically you need to estimate what federal bucket your self-employment income will fall under. I'm extremely confident it will be in the 22% bucket. Bam. Problem solved right?

So $2,000 x 92.35% x (2.9+12.4) = self employment tax = $282.59

$2,000 x 80% (QBI) = $1,600 .... x 22% = $352.

352+283 = $635.

I cut the IRS a check for $635 for this quarter. Is that about right? Did I miss anything?

Another thing --- do I need to submit the 1040 ES to the IRS to "show my work" --- or can I just send them the cash with the Q2 voucher form they say to send with it? Just curious. Thanks!
jebmke
Posts: 25271
Joined: Thu Apr 05, 2007 2:44 pm
Location: Delmarva Peninsula

Re: 1099 quarterly taxes

Post by jebmke »

PeterParker wrote: Mon Jun 14, 2021 11:48 am Another thing --- do I need to submit the 1040 ES to the IRS to "show my work" --- or can I just send them the cash with the Q2 voucher form they say to send with it? Just curious. Thanks!
You do not have to show your work. You can also make these payments electronically using the Direct Pay system or EFTPS. EFTPS takes some setup time but has some added features like being able to schedule all the payments in advance.
Stay hydrated; don't sweat the small stuff
newacct
Posts: 237
Joined: Thu Feb 23, 2012 1:03 am

Re: 1099 quarterly taxes

Post by newacct »

Be aware that if your AGI last year was more than $150k, it needs to be 110% of last year's tax, not 100%.

Also, this is the safe harbor for federal taxes. The rules for state taxes might be different.
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