estimated taxes

Forum|Forum|2 years ago
August 30, 2023
2 replies
0 views

I expect to earn $21,000 this year as a reading tutor. $5,000 of this has already been taxed by a school where I was employed this summer. Should I be making estimated taxes? I file jointly with my husband and his gross income is approx. $250,000.

Ask the Experts - Self-Employed - Aug 2023

MelanieC1

Hi @KHA1

Thank you for joining us today! Tutoring can be very rewarding! You state $5k of your income is already taxed. I am assuming that you will receive a W2 for that portion of income with the proper withholdings. The remaining amount of $16k is your estimate of self employment work that you expect to earn as an independent contractor.

The IRS expects us to "Pay As We Go" with our taxes. So yes, you should make quarterly payments to the IRS for this income as it is earned to avoid interest and penalties. You can make and track your tax payments by setting up an account on the IRS website: IRS Payments

Once you file a tax return that has self employed income, TurboTax will help estimate future year quarterly payments. It can be a little tricky the first year to estimate without any history. Here is a tool that you can use to help: Tax Payments Calculator .

Keep in mind that these are only tools and estimates. Keep good records of your self employed income and expenses and attempt to start your return early so you will have your best understanding of your tax liability.

Thank you!

Melanie, CPA

KHA1Author

My husband and I file jointly each year. Every year we receive a refund of approx. $5,000 - $6,000. As we receive a refund that would seem to be more than I would pay in estimated taxes from my $15,000 self-employment job, I assumed I would not need to pay estimated taxes. Is this correct?

MelanieC1

Great question @KHA1 ,

Unfortunately it is difficult for me to know without reviewing your previous years tax returns. There can be reasons that you received significant refunds such as the ages of your children, tax credits, investment losses, and others. These can change year to year and the result can catch taxpayers by surprise.

Without the detailed information available to me, my recommendation is to make the estimated payments and then claim a nice refund at tax time!

Thank you!

Melanie, CPA