This is my 1st year of business I did not pay any estimated taxes or self employment taxes for the entire year and I am preparing to file my tax return next week. (2024)

I have a full time job (my employer withholds for taxes) and my business is a part time online retail company (I am responsible for the taxes). I am sure that I will owe at least $1,500 in taxes from the business.

Will the IRS calculate how much I owe in estimated taxes and self employment taxes automatically? If not, how will they know I have paid? I understand that I will probably have some penalties to face.

Do I need to notify them when filing my tax return next week (April 17, 2018)? Do I make payment at the same time of filing and how? I will be filing with TurboTax Self Employed.

Kind regards,

Lee

• TurboTax Self Employed Online

‎June 3, 201912:41 PM

And line 79 is just an estimate.It’s common and expected for the IRS to bill you for some more depending on when they get you Tax due payment.Although you might not owe a penalty the first year.The first year you don't need to pay estimates as long as you pay in (by withholding) as much as your tax was last year.But if you will have a big income you should send in estimates so you don't owe too much next April on your tax return.

You might be able to eliminate it or at least reduce it.You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.It's form 2210.

It's under
Federal or Personal (for Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button

Thank you so much to everyone! I really appreciate the guidance.

Is the Self-Employment tax paid quarterly at the same time as the Estimated tax? April 17, 2018, June 15, 2018, September 17, 2018 & January 15, 2019.

Ah, ok, understood. Thank you! I was under the impression that the estimated taxes are to cover income tax and the SE tax is to cover Social security and Medicare. And that I would need to pay both separately.

So for example, I am filing as a single person, and if I make $40K at my full time job and from the part time online business I net $10,000 in profit. The IRS would calculate that my income tax is 25% as I make less than $91,900?

Which would then mean that I/TurboTax need to calculate my potential income tax and SE tax together for estimated taxes for 2018.

And line 79 is just an estimate.It’s common and expected for the IRS to bill you for some more depending on when they get you Tax due payment.Although you might not owe a penalty the first year.The first year you don't need to pay estimates as long as you pay in (by withholding) as much as your tax was last year.But if you will have a big income you should send in estimates so you don't owe too much next April on your tax return.

You might be able to eliminate it or at least reduce it.You can go to Federal Taxes tab or Personal tab, under Other Tax Situations and select Start by the Underpayment Penalties. You will answer a series of questions that may reduce or eliminate the penalty. Or you can elect to have the IRS figure the penalty for you.It's form 2210.

It's under
Federal or Personal (for Home & Business Desktop)
Other Tax Situations
Additional Tax Payments
Underpayment Penalties - Click the Start or update button

Then to prepare estimates for 2018.For SE self employment tax - if you have a net profit (after expenses) of $400 or more you will pay 15.3% SE Tax on 92.35% of your net profit in addition to your regular income tax on it. So if you have other income like W2 income your extra business income might put you into a higher tax bracket.

You must make quarterly estimated tax payments for the current tax year if both of the following apply:
- 1. You expect to owe at least $1,000 in tax for the current tax year, after subtracting your withholding and credits.

- 2. You expect your withholding and credits to be less than the smaller of:
90% of the tax to be shown on your current year’s tax return, or
100% of the tax shown on your prior year’s tax return. (Your prior year tax return must cover all 12 months).

To prepare estimates for next year you start with your current return, but be careful not to change anything.If you can't get back into your return, Try this, you can sign back onto your account, click on Add A State or Amend.This should get you back into your return.

You can just type W4 in the search box at the top of your return , click on Find. Then Click on Jump To and it will take you to the estimated tax payments section. Say no to changing your W-4 and the next screen will start the estimated taxes section.

This answer might also help:

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