Tax question- sort of

[iCe]

This is the first year that I will be full time contract, Ie no big corporation taking my taxes out for me, and I just filed and paid my 1st quarterly payment (ouch). Does the US Treasury (our friends) take out Social Security taxes from each quarterly payment or do I need to find and fill out yet another form and send them still more money?

Some things about not working for a large sloth-like corporation... some things I don't... Taxes are a don't.

[Shelby Lane]

http://www.irs.gov/businesses/small/...=98846,00.html

Did you fill out the Schedule SE? You have to figure out your estimated income tax and your estimated Self Employment tax (which is SS and Medicare). The estimated Self Employment Tax is what you find on the Sched SE.

I am not a tax professional, and I have never played one on TV, so take that for what it's worth. This is something that I hire out for -- I don't want to screw up on it so I'd rather have someone else just tell me what I need to pay.

[iCe]

Hey Shel

Yeah... I did but "it" (it = Turbotax for Small Business) didn't take into account my contract wages as far as I can tell. Just farm and photography... In other words... I know how much I paid in to SS and Medicare when I worked for a big corporation... and the deduction seems small. Hmmm... maybe not... if it's part of the quarterly then maybe it's x4? I vote for a flat tax :o/

[Shelby Lane]

If it seems small then something is wrong, LOL. It will be x4 over the course of the year but really, it will probably still feel ouchy. If it's just looking at farm and photography you're missing a lot. Okay, so you need to be filing your estimated income taxes from the contract wages and also anything you're earning from the "company" (I never did figure out how y'all were doing that). But then you also have to pay that 12.something % SS and Medicare tax. I always felt like if I figured 33% of my total was going to the gov't I was probably okay.

http://www.irs.gov/businesses/small/...129520,00.html

[bondarnes]

I have always heard the formula: 1/3rd for expenses, 1/3rd for taxes, and that leaves 1/3rd for you.

[iCe]

I figured it out.... weren't nuthin small about it

Don- That sounds about right... It's funny how taxes are somewhat transparent when someone else takes them out for you

[studiocygnet]

If it is your first year of paying your own self employment tax, you won't have much of a basis to go on, but I just got done with my taxes for the year 2007, and the self employment tax is at least as much as the income tax. Normally you base your quarterly payments on the previous years totals. But definitely, the income tax is only half of what you'll pay next April. Unless you're making a lot, the self employment tax (social security) is 15.3% of your net profits. And I'm also somewhere near 15 percent on the income tax level too. So added together, you get that 1/3 of your income Don mentioned going to the IRS.