Taxing Taxes

January 9, 2004 2:09 PM

Is there a tax accountant in the hizzouse, the 2nd ...
I did some work for some guys to make ends meet last year. Also, I had some income from unemployment. I need to file quarterlies next week for this stuff ... which forms do I need to file? [more inside]

All of the formulas that I found online told me to estimate it based upon what my tax liability was last year. However, this doesn't really apply -- I changed jobs, used a huge tax credit for my education, and didn't end up owing taxes last year. Should I just take 15.3% of my income for self employment tax and use that amount?

posted by SpecialK to Work & Money (2 answers total)

1040-ES is the estimated tax form. Follow the instructions there. Use coupon #4.

Surprisingly, IRS publications are informative and written in English that someone with some college can understand, although they'll be biased towards their interpretation, of course. Still, you can't go wrong following what the IRS says. Publication 505 covers the world of estimated tax and withholding.

The so-called safe harbor is that you have to pay either 90% of this year's tax or 100% of last year's tax through withholding and/or estimated tax. "Tax" is defined as the "total tax" after all non-refundable credits have been taken into account, but does include self employment tax. (The education credit is a non-refundable credit.) So, if you didn't owe any "tax" last year, then there is no reason to file for estimated tax, and you should just file on April 15 like everyone else.
posted by calwatch at 4:29 PM on January 9, 2004

Response by poster: Sweet, thanks. I just don't want to trigger an audit or anything messy like that. :-P
posted by SpecialK at 5:03 PM on January 9, 2004