Help!!! - Freeze-Frame Radio

allycat · Cat Scratch Diva

Help!!!

WebGuy · Doesn't Do Windows

For me, this year's estimates are based on last year's net income.

The first year in business, I didn't have to to the estimates because I didn't have any self employment income the year before. I just made sure to set some money aside for the taxes in case I actually made money.

My understanding is that as long as you base your estimates on the previous year's net, you are ok.

MzHartz · Permanent Vacation

Web's right on. You do it based on last year's taxes. They probably had to pay last years and got stuck with a penalty. The person that did their taxes should've helped him out with the payment schedule.

WebGuy · Doesn't Do Windows

My first year working out of tech school, I got a job hanging drywall. When I started, my boss said "If you will be a sub contractor and do your own taxes, I'll pay you and extra $1.00/hr." Not knowing any different, I was like "An extra buck/hr to do my own taxes? Sure!"

I know now that was technically not legal for him to do that because he was the only place I was working for. I think the limit is if more than 80% of your income comes from one place, you are their employer, not a sub contractor.

Anyway, at the end of the year, I went to an H&R Block thing in the mall to have my taxes done. The gal asked how much I had paid in estimates. I said "none". She said "well, you will have to pay a penalty then". I said, "I don't think so because I was a student last year and had no income and didn't file so there is no way I would have known what to estimate".

We argued about it for a while until she got her tax book out. She found it, got red faced and said "oh . . . uh . . . you're right".

allycat · Cat Scratch Diva

My parents own the business, they just started it 2.1.2008. He has only paid himself $500 since he started it. Do you think he needs to make a quarterly based on what his job paid him last year? or the $500? or does he need to pay it based on the money the business has profited so far?

MzHartz · Permanent Vacation

He needs to pay it based on what he thinks he'll have to pay in taxes next year. He should probably find a tax dude, if he doesn't want a CPA one of the tax places like Jackson Hewitt should be able to help him figure that out. But he should call in, tell them what he wants, and schedule an appointment with someone that can help him. He wants someone who has experience with business taxes, not just a regular tax preparer. But they'll probably just charge him their basic tax prep fees, if that, which would be cheaper than a CPA.