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

[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.