filing estimate taxes first year

[rubanitka 15]

Hi, guys! I am starting this year as an independent contractor and I would like to do everything right. I know I need to file estimate taxes 4 times a year which I have never done before. 

If anyone has been through the similar experience, I would appreciate your input, as I don't have anyone to ask. All friends and family are on W2 and know nothing about it.

Could you please guide me what forms I need to fill in every quarter and how/where to pay? No LLC or S-Corp, just a private person. Thank you!

[Mike E 11,741]

19 minutes ago, rubanitka said:

Hi, guys! I am starting this year as an independent contractor and I would like to do everything right. I know I need to file estimate taxes 4 times a year which I have never done before. 

If anyone has been through the similar experience, I would appreciate your input, as I don't have anyone to ask. All friends and family are on W2 and know nothing about it.

Could you please guide me what forms I need to fill in every quarter and how/where to pay? No LLC or S-Corp, just a private person. Thank you!

You file form 1040-ES four times a year: April 15,  June 15, September 15, and January 15

 

https://www.irs.gov/forms-pubs/about-form-1040-es

 

 

[Loren Y 2,756]

13 minutes ago, Mike E said:

You file form 1040-ES four times a year: April 15,  June 15, September 15, and January 15

 

https://www.irs.gov/forms-pubs/about-form-1040-es

 

 

I am a W-2 and 1099 employee, my wife is a 1099 employee, I have been doing this for a while and will help you where I can. Definitely setup a online account to make payments, it is the easiest way. My wife has a separate account she uses just for her tax payment, this is a easy way to save money for taxes and pay easily. We transfer about 25% of her paycheck into the account and 4 times a year make the estimated payments to the IRS. Once you get things set up it's a easy thing to do. Setting up the account can sometimes be trouble, make sure you enter your name exactly as it is on your tax forms, and that know your previous years tax information so you can get your account verified. As a 1099 employee you have to be diligent about putting the money for taxes aside, or you will end up in serious hurt come tax time. Not sure what type of money you will be making, but if it is over 6 figures, consider getting a CPA to help you out and " file" taxes quarterly that way you can see where you stand throughout the year and know if you need to put away more money or keep more for yourself. I have to say most people are not disaplined enough to do this on their own, but it is possible. I have done it for years and my wife is finally coming around to understanding how taxes work in this country ( she still hates when I take her money for the IRS, but she understands now about a year and a half since she started as a 1099). The first year is the rough one because you are starting out from scratch with no real idea how much to put aside. That's why it's best to do quarterly filing to gauge how you are doing thru out the year. I'll see if I can add some links for you to use when I get home to my computer.

[rubanitka 15]

On 1/24/2021 at 11:46 AM, Mike E said:

You file form 1040-ES four times a year: April 15,  June 15, September 15, and January 15

 

https://www.irs.gov/forms-pubs/about-form-1040-es

 

 

Thank you! Would I still need to file 1040es even if I decide to pay estimates via the phone or IRS app?

[rubanitka 15]

On 1/24/2021 at 12:11 PM, Loren Y said:

I am a W-2 and 1099 employee, my wife is a 1099 employee, I have been doing this for a while and will help you where I can. Definitely setup a online account to make payments, it is the easiest way. My wife has a separate account she uses just for her tax payment, this is a easy way to save money for taxes and pay easily. We transfer about 25% of her paycheck into the account and 4 times a year make the estimated payments to the IRS. Once you get things set up it's a easy thing to do. Setting up the account can sometimes be trouble, make sure you enter your name exactly as it is on your tax forms, and that know your previous years tax information so you can get your account verified. As a 1099 employee you have to be diligent about putting the money for taxes aside, or you will end up in serious hurt come tax time. Not sure what type of money you will be making, but if it is over 6 figures, consider getting a CPA to help you out and " file" taxes quarterly that way you can see where you stand throughout the year and know if you need to put away more money or keep more for yourself. I have to say most people are not disaplined enough to do this on their own, but it is possible. I have done it for years and my wife is finally coming around to understanding how taxes work in this country ( she still hates when I take her money for the IRS, but she understands now about a year and a half since she started as a 1099). The first year is the rough one because you are starting out from scratch with no real idea how much to put aside. That's why it's best to do quarterly filing to gauge how you are doing thru out the year. I'll see if I can add some links for you to use when I get home to my computer.

Thank you, Loren! You always have been a great support for the visa journey community!

Another silly question: lets say, if my husband and me are planning to file our taxes for 2021 as 'married filing jointly' and claim the standard deduction for $24800, can I still write off the standard mileage deduction ($0,56/mile) and possibly some other expenses off of my earnings? Or if we take the standard deduction, then I am not qualified for any write-offs?

[Loren Y 2,756]

33 minutes ago, rubanitka said:

Thank you, Loren! You always have been a great support for the visa journey community!

Another silly question: lets say, if my husband and me are planning to file our taxes for 2021 as 'married filing jointly' and claim the standard deduction for $24800, can I still write off the standard mileage deduction ($0,56/mile) and possibly some other expenses off of my earnings? Or if we take the standard deduction, then I am not qualified for any write-offs?

Normally to write off milage you have to itemize, but I'm not 100% on that. There may be a way to write off milage without itemizing, that you would have to ask a CPA or tax person.

[Mike E 11,741]

14 hours ago, rubanitka said:

Thank you! Would I still need to file 1040es even if I decide to pay estimates via the phone or IRS app?

You don’t been to mail a paper 1040ES if you pay it electronically. 
 

You can do this electronically if you want.  Some people even pay electronically multiple  times a quarter.  
 

I’ve never bothered. I personally prefer the paper trail of a canceled personal check. In years when I’ve done ES I would just send 4 checks of equal amount before the due dates.
 

My ex wife who collects alimony from me just takes her previous  tax year’s liability, multiplies by 1.1 and then divides by 4 and sends 4  equally sized checks by the due dates (or sometimes late but the penalties and interest aren’t much).    This way if she under estimates her current taxes, penalties are  waived due to the 110 percent rule.  
 

I recommend reserving 35 percent of your income in a separate bank account and use that money to pay your estimated taxes. And I recommend using the 110 percent rule. This means that by January 15 you will often have additional money you have to pay by April 15, but you are protected by the 110 percent rule.  

Edited January 26, 2021 by Mike E

[Mike E 11,741]

14 hours ago, Loren Y said:

Normally to write off milage you have to itemize, but I'm not 100% on that. There may be a way to write off milage without itemizing, that you would have to ask a CPA or tax person.

Schedule C EZ is gone.  You have to itemize mileage  on schedule C.  
 

So you take the standard deduction and then on schedule C subtract all your business costs from your business revenue.  
 

If you use TurboTax it is very easy.  

Edited January 26, 2021 by Mike E

[rubanitka 15]

7 hours ago, Mike E said:

Schedule C EZ is gone.  You have to itemize mileage  on schedule C.  
 

So you take the standard deduction and then on schedule C subtract all your business costs from your business revenue.  
 

If you use TurboTax it is very easy.  

That was really helpful for me to understand. Thank you, Mike!