wrldruler <filed...[at]hotmail.com> wrote:

- quote -

Reread form 2210. within $1,000 without any installments is
enough to prevent any penalty. You're good.

ed

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

Thanks for the responses.

I am not going to file Estimated Taxes. I will just play
with my withholding at my regular job if necessary.

I plugged the numbers into my spreadsheet, simulating my tax
situation for this year. It says I will owe the Feds $730
(not worried because my State refund will cover this amount)

Instructions for 1040 Line 77 says. "You may owe this penalty
if:"
(1) Line 76 is at least $1,000...or
(2) You did not pay enough estimated tax by any of the due
dates.
This is true even if you are due a refund.

I am obiously good on #1 because the amount I owe is under
$1,000

It is #2 I am worried about. I am not going to pay any
estimated taxes. But is the IRS going to say I should have,
and then penalize me for not doing so?

Thanks,

Chris

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

"wrldruler" <filedown[at]hotmail.com> wrote:

- quote -

You need to cover 100/110% of last years tax, or 90% of
current year. The 90% of current year can be an
annualization calculation. Don't forget about your state.
Each state has its own requirements.

If you need help calculating the quarterly Fed & state
estimated payment amounts, contact your CPA/tax advisor.

One important thing you forgot is to record your legitimate
business expenses against this income.

___________________________________
<<< Benjamin Yazersky, CPA [NJ & NY] > > -----> real address on hobokeni or hobokenx <-----

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

"wrldruler" <filedown[at]hotmail.com> wrote

- quote -

You may want to compute 110% of last years tax bill,
subtract your estimated withholding amount, round it up to
the nearest....whatever, and send that amount in. In other
words, meet the 110% test to be safe.

The remainder you should be absolutely sure to set aside and
pay in April with the return.

Remember that your $5K of income will see allowed business
expenses that you incur in generating that income, whatever
those may be, and it's possible that you'll show losses. So
you'll most likely not see $5K of net profit from this
business activity.

--
Paul A. Thomas, CPA
Athens, Georgia

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

wrldruler <filed...[at]hotmail.com> wrote:

- quote -

Your total withholding in 2007 should equal your 2006 tax to
avoid a penalty. See IRS form 2210. Increase your
withholding to meet that safe harbor instead of making a
1040ES payment.

ed

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

"wrldruler" <filedown[at]hotmail.com> wrote:

- quote -

You will report the income and your 2007 expenses on your
2007 Schedule C. Any 2008 expenses will go on your 2008
Schedule C.

<snip
- quote -

Assuming your 2006 AGI was under $150,000 the figure from
your 2006 return that you must match in 2007 withholding is
"total tax." Do that and you'll have no penalty regardless
of how much you owe come April 15, 2008.

Your state may have different rules. For example, in
Maryland it's 110% of last year's tax regardless of AGI.

You have plenty of time to adjust your withholding if it
looks like you'll need more. That's an easier route than
making ES payments. Do put about half the $5,000 where you
can find it April 15. That way you'll be sure you have what
you need to pay what's due.

--
Phil Marti
Clarksburg, MD

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

wrldruler <filedown[at]hotmail.com> wrote:

- quote -

If you expect to satisfy the safe harbor rule, as you say
above, then you don't need to make an estimated payment.

- quote -

Your tax bracket x $5,000.

Or you could give your regular employer a new W-4 to
increase your withholdings for the rest of the year (either
by reducing the number of allowances, or by filling in the
"additional tax to withhold" field).

--
Barry Margolin, barmar[at]alum.mit.edu
Arlington, MA
*** PLEASE don't copy me on replies, I'll read them in the group ***

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >

I recieved an offer to be an indepedently contracted
webmaster for a county-government affliated non-profit.

At their request, I mailed them a W9 stating I was an
individual and gave them my SSN, along with a signed
contract which stated I would do 12 months of webmaster
services for $5,000.

They cut me a check for $5,000.

So I assume I will be getting a 1099-Misc at the end of the
year, and I will include this $5,000 on next year's taxes. I
have read on other posts: "1099 misc income goes on Schedule
C and any net profit goes over to Schedule SE to pay Social
Security."

My question is regarding estimated taxes / underpayment
penalty.

This was unepxected money. At the begining of the year I set
up my withholdings to barely break-even. Now it is August
and I suddenly have an extra $5,000 in income. But I think I
am OK on the underpayment penalty. I think I might miss the
90% mark, but my withholdings should match last year's taxes
due.

2 questions:

(1) Do I need to make an estimated payment on this $5,000?

(2) If so, how should I calcuate the amount to send?

Thanks,

Chris

<< ------------------------------------------------------- > << The foregoing was not intended or written to be used, > << nor can it used, for the purpose of avoiding penalties > << that may be imposed upon the taxpayer. > << > << The Charter and the Guidelines for submitting posts > << to this newsgroup as well as our anti-spamming policy > << are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ------------------------------------------------------- >