|
|
Self Employment taxes & estimated payments
06-11-2013, 09:00 PM
|
#1
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
|
Self Employment taxes & estimated payments
Hope someone knows something about this and can me how my son can make estimated payments of self employment taxes.
My college student son has a job where he is an independent contractor and no withholdings for taxes are made.
He knows he has to be both the employee and employer share of self employment taxes. He is only making $400 a month. He has been paid so far for one month of work.
He is our dependent but given what he is making I don't expect him to owe any income taxes for the year. However, he will owe self-employment taxes.
Turbo Tax says he doesn't have to make estimated payments if he will owe less than $1000 and he will otherwise withhold 90% of his 2013 tax liability (he won't) or will withhold 100% of his 2012 tax liability. He had no tax liability in 2012 and filed no tax return. So I don't know if that means he can just not do anything withholding this year. Since I don't know, I figured it is easiest for him just to go ahead and file and estimated payment of $61.20 by 6/17 and then file quarterly after that.
My first thought was to set him up at EFTPS. We did that and he was supposed to be mailed a PIN. He got a letter today saying that the information submitted doesn't match IRS files. I don't know if this is because (1) he has never in the past filed a tax return, (2) he used his middle name at EFTPS while on our tax returns I use his middle initial instead, (3) his SS number was incorrectly typed in at EFTPS, or (4) some other unknown reason. It basically says to either call the IRS to verify information or check a current tax return and re-enroll. So he re-enrolled after double checking my tax return (where he is shown as a dependent) and double checking his SS number. I don't know if that will solve this. However, it takes a week or more to get the PIN so even if it works we probably don't have it before 6/17.
So I then decided to do estimated tax vouchers through Turbo Tax. Turbo tax though wants to do vouchers for the whole year for $113 for each quarter. However, he didn't need to do one in April and he only needs to do one for $61.20 for June with larger ones later. I found no way in Turbo Tax to create vouchers for estimated taxes for different amounts.
So -- after all that --
Is there some place to get and print estimated tax vouchers where he can fill in the exact amount he wants to send?
|
|
|
|
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!
Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!
You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!
|
06-11-2013, 09:05 PM
|
#2
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Nov 2010
Location: Sarasota, FL & Vermont
Posts: 36,370
|
You can print them out in TurboTax. Open his last year return and open a form for the 2013 estimated payments. I believe that you can override any of the vouchers that TurboTax comes up with, print the ones you need and ignore the rest.
As long as the IRS gets its money and his SS so they know where to apply it you should be all set.
Candidly, given the amounts involved, I wouldn't fret too much about it.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
Retired Jan 2012 at age 56
|
|
|
06-11-2013, 09:06 PM
|
#3
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Apr 2003
Location: Hooverville
Posts: 22,983
|
Quote:
Originally Posted by Katsmeow
Hope someone knows something about this and can me how my son can make estimated payments of self employment taxes.
My college student son has a job where he is an independent contractor and no withholdings for taxes are made.
He knows he has to be both the employee and employer share of self employment taxes. He is only making $400 a month. He has been paid so far for one month of work.
He is our dependent but given what he is making I don't expect him to owe any income taxes for the year. However, he will owe self-employment taxes.
Turbo Tax says he doesn't have to make estimated payments if he will owe less than $1000 and he will otherwise withhold 90% of his 2013 tax liability (he won't) or will withhold 100% of his 2012 tax liability. He had no tax liability in 2012 and filed no tax return. So I don't know if that means he can just not do anything withholding this year. Since I don't know, I figured it is easiest for him just to go ahead and file and estimated payment of $61.20 by 6/17 and then file quarterly after that.
My first thought was to set him up at EFTPS. We did that and he was supposed to be mailed a PIN. He got a letter today saying that the information submitted doesn't match IRS files. I don't know if this is because (1) he has never in the past filed a tax return, (2) he used his middle name at EFTPS while on our tax returns I use his middle initial instead, (3) his SS number was incorrectly typed in at EFTPS, or (4) some other unknown reason. It basically says to either call the IRS to verify information or check a current tax return and re-enroll. So he re-enrolled after double checking my tax return (where he is shown as a dependent) and double checking his SS number. I don't know if that will solve this. However, it takes a week or more to get the PIN so even if it works we probably don't have it before 6/17.
So I then decided to do estimated tax vouchers through Turbo Tax. Turbo tax though wants to do vouchers for the whole year for $113 for each quarter. However, he didn't need to do one in April and he only needs to do one for $61.20 for June with larger ones later. I found no way in Turbo Tax to create vouchers for estimated taxes for different amounts.
So -- after all that --
Is there some place to get and print estimated tax vouchers where he can fill in the exact amount he wants to send?
|
Yes, from IRS.gov. You could also get Turbo-Tax to queue up some blank 1099-ES forms, and fill them out however you wish. Getting the forms directly from IRS is easier.
Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
|
|
|
06-11-2013, 09:09 PM
|
#4
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
|
Google is your friend.
http://www.irs.gov/pub/irs-pdf/f1040es.pdf
You might be over-complicating this..........
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
|
|
|
06-11-2013, 09:18 PM
|
#5
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
|
Thanks all. The reason I hadn't thought of IRS directly was that years ago IIRC you had to print out certain forms in certain colors or they weren't official. I don't remember the details but then I started using software....
Didn't know that about being able to print out blank forms from Turbo Tax.
And, yeah, I'm not too worried about it due to the amount involved but since I'm helping my son I want to get it right and show him how to do it right for when he is doing all this himself later on.
|
|
|
06-11-2013, 09:38 PM
|
#6
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Mar 2005
Location: Chicago
Posts: 13,186
|
Quote:
Originally Posted by Katsmeow
since I'm helping my son I want to get it right and show him how to do it right for when he is doing all this himself later on.
|
It's not very complicated Kat.
Just tell your son:
1. Earn money
2. Send it to the gov't
3. Don't expect a thank you card
__________________
"I wasn't born blue blood. I was born blue-collar." John Wort Hannam
|
|
|
06-11-2013, 09:54 PM
|
#7
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
|
|
|
|
06-11-2013, 11:32 PM
|
#8
|
Thinks s/he gets paid by the post
Join Date: Jan 2004
Posts: 2,049
|
I routinely owe several thousand each April and the penalty is a pittance. If he doesn't make the 6/17 deadline (and even if he does), he can fill out Form 2210, line 18 (Section A, Underpayment Penalty). I wouldn't sweat it.
|
|
|
06-12-2013, 02:03 AM
|
#9
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
|
Pretty sure if he didn't pay any tax in 2013, then there is no penalty for not withholding enough in 2013. He'll owe what he owes but he'll have until April 15, 2014 to pay it.
|
|
|
06-12-2013, 06:27 AM
|
#10
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by clifp
Pretty sure if he didn't pay any tax in 2013, then there is no penalty for not withholding enough in 2013. He'll owe what he owes but he'll have until April 15, 2014 to pay it.
|
+1
Safe harbor - if you pay the prior years taxes* in equal installments for each of the periods, you will owe no penalty.
* multiply by 1.1% if prior year income was over $150K
__________________
Retired since summer 1999.
|
|
|
06-12-2013, 09:08 AM
|
#11
|
Thinks s/he gets paid by the post
Join Date: Jan 2006
Posts: 4,172
|
Quote:
Originally Posted by audreyh1
* multiply by 1.1% if prior year income was over $150K
|
audrey...........your fingers might get a ticket for speeding.........
I think you meant.....multiply by 1.1x (or 110%)?
|
|
|
06-12-2013, 09:24 AM
|
#12
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
|
Quote:
Originally Posted by clifp
Pretty sure if he didn't pay any tax in 2013, then there is no penalty for not withholding enough in 2013. He'll owe what he owes but he'll have until April 15, 2014 to pay it.
|
I know that if you withhold 100% in 2013 of the taxes you paid in 2012 (unless income is above a certain amount in which case it is 110%) that you don't have a penalty for under withholding in 2012. What I didn't know for sure was whether that applied to someone who had no income at all in 2012 and therefore filed no tax return.
In any event, he doesn't mind doing the estimated taxes and I sort of want him to get in the habit of doing it if he needs to do it.
|
|
|
06-12-2013, 01:57 PM
|
#13
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jan 2006
Location: Rio Grande Valley
Posts: 38,145
|
Quote:
Originally Posted by kaneohe
audrey...........your fingers might get a ticket for speeding.........
I think you meant.....multiply by 1.1x (or 110%)?
|
Right - thanks. Multiply by 1.1, or 110%.
But the OP doesn't have to worry about this scenario for her dependent anyway
__________________
Retired since summer 1999.
|
|
|
06-13-2013, 06:06 AM
|
#14
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Oct 2006
Posts: 7,733
|
Quote:
Originally Posted by Katsmeow
I know that if you withhold 100% in 2013 of the taxes you paid in 2012 (unless income is above a certain amount in which case it is 110%) that you don't have a penalty for under withholding in 2012. What I didn't know for sure was whether that applied to someone who had no income at all in 2012 and therefore filed no tax return.
In any event, he doesn't mind doing the estimated taxes and I sort of want him to get in the habit of doing it if he needs to do it.
|
He paid $0 taxes in 2012, and so he has 100% of his taxes in 2013.
You are right it is a good habit to get into especially because young people are often horrible about saving for taxes. Also one of the by products of zero interest rates for savings is it just doesn't matter. When you could get 6% in a money market and you got a refund of $2,000 you were losing out on $60 in interest. Now days at .1% interest your no interest loan to Uncle Sam cost you a buck. Might as well over withhold to avoid penalties.
|
|
|
06-13-2013, 06:21 AM
|
#15
|
Thinks s/he gets paid by the post
Join Date: Jul 2002
Posts: 1,587
|
As an independent contractor, your son would be filing income tax return with a Schedule C. He pays self-employment taxes on his profits. Don't forget to track and deduct expenses of his venture, such as mileage, small tools & supplies, possibly uniform, any licenses or out of pocket training. And he would only pay self employment taxes if his profit for the year exceeded $400.
My 14 & 16 year old sons are soccer refs and get paid mostly in cash so I insist they keep a log of income & expenses & mileage.
|
|
|
06-13-2013, 02:25 PM
|
#16
|
Thinks s/he gets paid by the post
Join Date: Jun 2007
Location: near Canadian border and near Mexican border
Posts: 1,142
|
Your son had $0 liability in tax year 2012. He has met Safe Harbor for 2013 by ensuring he has paid 100% of the 2012 liability which was $0. If he were to make income where his taxes for 2013 are $2,000 (example). Just pay the amount prior to 4/15/2014. For 2014 he could pay estimated taxes of $2,000 to meet the 100% Safe Harbor rule. Even if he had a $50,000 tax liability for 2014, he has met the IRS requirement and no penalty is due for under paying. If he chose not to pay estimated taxes for 2014 and his tax liability were less than $1,000, no penalty. Even if his liability were to exceed the $1,000 and he had not paid the estimated taxes, it is rare he would get a penalty. If a penalty were received it would be small.
__________________
Pigs get fat, hogs get slaughtered. That's my story and I am sticking to it.
|
|
|
06-13-2013, 02:29 PM
|
#17
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jul 2009
Posts: 5,308
|
Quote:
Originally Posted by RE2Boys
As an independent contractor, your son would be filing income tax return with a Schedule C. He pays self-employment taxes on his profits. Don't forget to track and deduct expenses of his venture, such as mileage, small tools & supplies, possibly uniform, any licenses or out of pocket training. And he would only pay self employment taxes if his profit for the year exceeded $400.
My 14 & 16 year old sons are soccer refs and get paid mostly in cash so I insist they keep a log of income & expenses & mileage.
|
What about mileage driving from our house to the dojo (he works at a martial arts dojo) and back? Could he deduct that mileage?
Probably won't make a difference since his profit will be above $400 but not enough that he will owe income tax. Still good to know.
|
|
|
06-13-2013, 02:31 PM
|
#18
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,021
|
Quote:
Originally Posted by Katsmeow
What about mileage driving from our house to the dojo (he works at a martial arts dojo) and back? Could he deduct that mileage?
Probably won't make a difference since his profit will be above $400 but not enough that he will owe income tax. Still good to know.
|
Deducting Business Expenses
__________________
Numbers is hard
|
|
|
06-13-2013, 03:31 PM
|
#19
|
Moderator Emeritus
Join Date: Sep 2007
Posts: 17,774
|
Although he would be small potatoes to the IRS and not worth going after, they may not consider him an independent contractor (thus making the employer subject to paying into FICA and withholding his share) http://www.irs.gov/Businesses/Small-...actor-Defined:
Quote:
You are not an independent contractor if you perform services that can be controlled by an employer (what will be done and how it will be done). This applies even if you are given freedom of action. What matters is that the employer has the legal right to control the details of how the services are performed.
If an employer-employee relationship exists (regardless of what the relationship is called), you are not an independent contractor and your earnings are generally not subject to Self-Employment Tax.
|
__________________
“Would you like an adventure now, or would you like to have your tea first?” J.M. Barrie, Peter Pan
|
|
|
06-13-2013, 04:30 PM
|
#20
|
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Join Date: Dec 2008
Location: On a hill in the Pine Barrens
Posts: 9,720
|
Who is, and isn't, a contractor is dependent on a list of items that the IRS changes from time to time. Used to be a list called 20 questions. Looking at the IRS site now, there is a form SS-8 that is used to make the determination.
What is important is that the the IRS determines this, not the employer or employee. If just one instructor at the facility is paid on a W-2, then it is difficult to justify others as being 1099 workers.
|
|
|
|
|
Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
|
|
Thread Tools |
|
Display Modes |
Linear Mode
|
Posting Rules
|
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts
HTML code is Off
|
|
|
|
» Recent Threads
|
|
|
|
|
|
|
|
|
|
|
|
|
» Quick Links
|
|
|