The Unpleasantness of Reality

[ladysprite]

For a few months now I've been basking in the simplicity, freedom, and delight of being self-employed, working as a relief vet. Unfortunately, now I've run head-on into the down side of this career choice, namely figuring out my own taxes.

Okay, I need to pay quarterly taxes - I can handle that. It shouldn't be too complicated; the Estimated Quarterly Tax form is only one page. Simple, yes? I'm fairly adept at arithmetic, I've kept careful records, and I'm giving myself almost two weeks to work on it.

Of course, each line of the form references a separate form that has to be filled out first in order to come up with the base numbers, each of which in turn references another two forms that have to be filled out, And in all of these forms and references, there are even more details that are never actually mentioned. Meanwhile, most of them don't even apply to me, since I have to fill out the same paperwork as people running corporations, but I need to fill them out in order to determine that I don't have to fill them out.

And then, when I finally give up and call the IRS, I'm told that I needed to do this back in April. Even though I only became self-employed in March, even though I filed a regular tax return in April, even though I wouldn't have had anything to pay beyond a few dollars. When confronted with this information, the tax guy on the phone just hemmed and hawed at me.

I've done as much of the paperwork as I can without my hubby's info, and I've come up with a reasonable number, and I've set aside the funds to pay it. I'm not sure whether I should be paying a quarter or a half, since I didn't make an April payment, but.... I'll figure that out. And then I'm hiring an accountant, or a tax preparer, or something, to rescue me next quarter. Because this has managed to reduce me to a whimpering pile of frustration like nothing else in the world, in record time.

Comments

[braider.livejournal.com]

Write/email them, and get a TEXT response from them regarding what you should do. LEAVE A PAPER TRAIL. This is important. Then do what they tell you to do.

[mindways]

The trouble is, past a certain point, the IRS isn't allowed to give tax advice - not even to say, "yes, if you do it (way X), we'll accept it, and it's OK". Because taxes are laws, and interpretation of the laws is a judicial-branch thing. All they can do is say "we recommend you talk to a tax professional". :\

(Obviously, there are many things they can answer - but they tend to be general statements of "the proper way to do things is X"; individual advice of the form "your situation is Y; you must therefore do Z" can get them in trouble, from what I understand.)

Not to say that paper trails are bad; quite the contrary - more to say that the IRS is likely to be unhelpful...

[rufinia.livejournal.com]

It may be worth getting something like TurboTax for next time- Anna can sing it's praises better than I can. because I've only used their online version for my individual taxes last year. It was nice, though, because it would take you to the worksheets for the forms to figure out what the baseline number is for your one page form. And keep track of it all.

My dad, who is one of those people who (and no, I don't get this either) *enjoys* doing his taxes (the doing, not the paying), also loves TurboTax.

[matildalucet.livejournal.com]

I kind of enjoy doing taxes, though not enough to make a profession out of it. It's sort of a game to me. I've been told to be careful and proofread what TurboTax turns out, particularly on state stuff or anything funky in investments or other income. I decided to just spreadsheet ours last year.

I can't say I enjoyed reading the instructions that refer me to a publication that refer me to another publication. I think I would have just cried if the IRS hadn't put all those pubs on the web where I could just download them at 10pm when I felt like it.

[spiritdancer]

I can recommend a good, relatively inexpensive accountant who's happy to do stuff by phone/fax/email/etc - call me, if you'd like a reference (as I download my Quickbooks file via FTP frm their machine to mine).

Yep, the IRS can drive you out of your mind very quickly :-)

IIRC, You would just send in the 1st quarter payment, and remember your next one is due June 15.

[ladysprite.livejournal.com]

The June 15th payment *is* the one I'm sending out now, since it's June 3rd. :)

I'm trying to figure out whether I should send one payment now, or two. I think emailing the IRS is a good idea, at this point....

[tafkad.livejournal.com]

I recommend you pay for both quarters. That way, if you owe for both, you're fine; if you only owe for one, you can work with them to figure out what to do next. I've never heard of anyone being taken to court for overpayment.

[spiritdancer]

My bad; I read your post while waiting on a late appt at the office and thought you were just getting around to sending in the April payment :-) (y'see, I have a Really Bad Problem about getting tax stuff done - like I've filed taxes for the last two years at the end of the second extension bad)

IIRC, they generally won't come after you if you miss a quarterly payment or send it in late; you will likely end up paying penalties later (but only if you have paid less than 80% of your total liability for the year by Jan 15 the following year - 1/15/05 for tax year 2004; 1/15/2006 for TY 2005). And if y'all file jointly, _his_ withholding at work counts towards this (ie, Daniel and I have ended up not owing anything extra or filing quarterly for the last 5 years due to what's been withheld from his pay).

TurboTax is pretty straight-forward if you are self-employed, single, and have no mortgage stuff to worry about; after buying the business, I dump everything into Ron's (my accountant) and Jeri's (his assistant) laps; they make sure I keep up with what needs doing, and, more importantly, answer my questions for me AND _Ron_ talks to the IRS (not me! whee!)

_M_

[spiritdancer]

Oh, yes, and the penalties, if you end up owing at year's end, aren't generally all that bad (speaking from experience, here)

Estimated taxes paid quarterly

[pamelina.livejournal.com]

I've been doing this since 1989. Some good news: the first year you're required to do this, they don't penalize you for not doing it right.

There are two ways to figure estimated taxes: 1) Do all the math and worksheets and figure out what you're really going to owe (as if you know that in advance--really!) then divide into the 4 equal parts and pay on the due days.

2) Just pay what you owed the year before, divided into 4 parts and paid on the due dates. This way is much easier, and will be available to you the second year you have to do it. This will avoid penalties and interest, even if you owe more than you paid in est. taxes if you file by April 15th. (If you make lots more this year than last, I think 50,000 more, then you have to pay 110% of the previous year's taxes in order to avoid penalties and interest, but this is unlikely to apply to you--I've never had it apply to me, even.) This is the easier option that I use, and I recommend it.

And BTW, once you've made estimated tax payments for one year, they'll send you the forms and envelopes with your name already pre-printed on them for the next year.

[starcat-jewel.livejournal.com]

Hiring someone to do your taxes for you is one of those things that I consider "money well spent". And remember, you can deduct the fees you pay them!

[meranthi.livejournal.com]

If you hire someone for next quarter, get them to explain what they're doing. Some of them seem to have a hard time with this concept. That said, I think it's not a bad idea to hire someone, if only to help with the frustration.

[tafkad.livejournal.com]

The moment my taxes became more complicated than the standard form (mortgages and refinancing will do that to you), I hired an accountant.

[sdavido.livejournal.com]

I do turbotax, and it's wonderful.

I also got a notice that said I have to do the quarterly payment thing, and yeah, the first payment was due back in April, just as I was paying my taxes for 2004! It seems one of my schools didn't bother to withhold, so the IRS is now requiring that I pay everything for this year upfront . . . even though I'm not working for that school, and having all the other schools withhold as normal. What this means is that I'll get a refund . . . but of course no interest, etc. Arghhhh.

Yeah, pay the 2 quarters, because if they're late, it's okay . . . if you're late, they take you to court.

If you decide to go the turbo tax route this coming year, I'll be happy to come over and help you through it.