Quarterly taxes with an unpredictable income

Forum|Forum|1 year ago
August 28, 2024
1 reply
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I set-up my own company in April and had a profitable 1st quarter. After all my expenses and start-up costs, I paid 25% of circa 60k in June. As I am service based and on my own, I spent most of the next few months delivering the work and will have had no additional income. Do I not pay anything for this quarter? My earnings are too unpredictable right now to calculate even payments. Any advice here would be great.

marctu

Well let's acknowledge the challenge that you have and quite a few others may have with uneven income when self-employed. First good for you in making a second quarter payment. Assuming all this income $60K was in the second quarter (April 1 to May 31st) when you annualize income at the end of the year there should be no estimated tax penalty, assuming the 25% paid ($15K) covers the tax liability for income tax and self-employment tax.

If you have no income in the third quarter (June 1 to August 31st) you would not need to make an estimated tax payment, since when you annualize your income the the number would be zero or below, as you are probably incurring expenses providing the service.

With a year or so of operating data you can probably model a future year. With this being the first year, that would not be possible.

Thank you for the question @chrishornby87 and best of luck with this venture.

Be well and safe!

Marc T.

Turbo Tax Expert

27 Years of Experience Helping Clients

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