All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎07-26-2017
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Independent Contractor quarterly payment questions

Greetings!

 

As of January 16, 2017, I accepted a position with an organization where I am considered to be an independent contractor. This organization has only 3 people working for them, including myself. However, I am just now realizing that many (if not all) independent contractors pay their estimated taxes quarterly. Otherwise, these individuals are susceptible to pay penalties and/or interest to the IRS if they wait until the year ends. 

 

Considering that for the entire 2016 year I worked as a W-2 employee for another organization, am I exempt from having to pay quarterly? Will I be able to file my taxes at the beginning of 2018 like I always have and then pay whatever I owe to the IRS in one lump sum? I am married and typically file a joint tax return. Forgive me for my naivety on this matter, but hopefully one of you kind souls out there are able to clear this matter up for me.

 

Thank you!

Tax Pro
Posts: 5,442
Registered: ‎02-23-2016

Re: Independent Contractor quarterly payment questions

Hi taxidiot88,

 

Welcome to the H&R Block community.

 

You do not necessarily have to make estimated tax payments, although it is more likely that you will be required to do so if you're a contractor or a business owner.

 

If you did not owe any tax last year then you are exempt from making estimated payments for the current year.

 

If you owed tax last year but at least 90% of the total tax liability on your tax return for the current year will be covered by withholdings from other jobs you are still exempt from making estimated payments for the current year.  Since you are married & filing a joint return your spouse's withholdings are part of the mix, so with both of your income and withholdings taken into account you may be a good part of the way there already.

 

You'll file a tax return in February as you normally do no matter what, but if you don't qualify for an exception then you may have to make a payment to the IRS once each June, September, December, and April.  Payments are required when you don't qualify for an exception and you expect to owe $1,000 or more in taxes for the year.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎07-26-2017

Re: Independent Contractor quarterly payment questions

Hi Louis,

 

Thank you so much for the prompt reply and very helpful information. Your answers provide a definite relief, so thank you again for your assistance! 

 

Best!

Tax Pro
Posts: 5,442
Registered: ‎02-23-2016

Re: Independent Contractor quarterly payment questions

You're welcome.