https://boards.hellobee.com/ Pregnancy, Baby and Parenting blog, by Hellobee en Thu, 28 May 2026 09:57:56 +0000 https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717398 Mon, 23 Jun 2014 21:22:23 +0000 Hoots 1717398@https://boards.hellobee.com/ <p>@allison: I did this for the last two years. A few things I learned: </p> <p>1) Save every receipt. Get a photo box or something similar and have him make a habit of dropping them in it. Documentation is the key to everything. (I also wrote stuff down in a hard copy of a calendar I kept in my car to remember things like when I had to travel for business) </p> <p>2) Make sure you change to paper statements for bank and for credit cards (or be very diligent about printing out monthly statements), you will need them. </p> <p>3) Look at your tax liability from last year. Divide that number by 4 and pay that amount by the dates on the 1040-ES dates (April, June, September, January). This should avoid penalties and interest. This is by far the simplest way to do it. The form is just freaking confusing.</p> <p>4) Find an accountant to do the actual taxes. He/She should give you a general way to group expenses to make the most of any deductions. It also will pay for itself in the long run because most likely he will find more than enough in legitimate deductions to lower your tax bill. It will also probably minimize your chance of getting audited as your return is less likely to throw a red flag. And, if you do get audited, there will hopefully be very little for them to find. </p> <p>As for how much I put back: 40% the first year because I wasn't sure. The second year: 37.5%. I stuck it in a savings account and didn't touch it unless it was to pay the quarterly estimated taxes. But, as a disclaimer: I did have a lot of extra money left over at the end. If you absolutely need every penny, maybe get an accountant beforehand to help you with the percentage. </p> <p>Good luck!!! I remember how hard it was to try to figure this stuff out and the internet isn't very helpful. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717384 Mon, 23 Jun 2014 21:02:32 +0000 allison 1717384@https://boards.hellobee.com/ <p>@T.H.O.U.: I think I will try this. Maybe tomorrow. Ha. Thank you!</p> <p>That's part of it, too: we don't know how much he will be making. He's supposed to come up with a figure and discuss with the company owner. So we're trying to figure out if it would be, in some ways, beneficial to ask for less? But it's just so hard to estimate all that. Like, would it be better or worse to try to qualify for EIC? Or how will our health insurance premium be affected, depending on what our income does? I'm playing with a lot of "what-ifs" currently. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717381 Mon, 23 Jun 2014 20:57:34 +0000 T.H.O.U. 1717381@https://boards.hellobee.com/ <p>@allison: Do you know the estimated earnings of what he would be earning? </p> <p>1a. Enter your expected income and profits subject to self-employment tax* </p> <p>(start at top of page 6) </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717379 Mon, 23 Jun 2014 20:56:47 +0000 T.H.O.U. 1717379@https://boards.hellobee.com/ <p>@allison: Try to work your way through the worksheet i just posted. It really shouldn't be that hard to go line by line to try to get an idea of what you'll owe (assuming you have a good idea on his estimated earnings). Most of this is basic addition and subtraction to just get to a ballpark estimate, you really may not need an accountant (but I understand if you want someone to double check it all). </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717377 Mon, 23 Jun 2014 20:55:38 +0000 allison 1717377@https://boards.hellobee.com/ <p>@T.H.O.U.: Yeah, I saw that. And I don't understand it. Ha.</p> <p>I'm not sure how to base our taxes on anything we've paid before, because it's a completely different job. I know we have to pay the estimated taxes, I just want to pay the right amount. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717373 Mon, 23 Jun 2014 20:53:06 +0000 T.H.O.U. 1717373@https://boards.hellobee.com/ <p>@allison: Click on the link above to get to this worksheet. </p> <p><a href="http://www.irs.gov/pub/irs-pdf/f1040es.pdf" rel="nofollow">http://www.irs.gov/pub/irs-pdf/f1040es.pdf</a> </p> <p>General Rule<br /> In most cases, you must pay estimated tax for 2014 if both of the following apply.<br /> 1. You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits.<br /> 2. You expect your withholding and refundable credits to be less than the smaller of:<br /> or a. 90% of the tax to be shown on your 2014 tax return,<br /> b. 100% of the tax shown on your 2013 tax return. Your 2013 tax return must cover all 12 months.<br /> Note. These percentages may be different if you are a farmer, fisherman, or higher income taxpayer. See Special Rules, later.<br /> Exception. You do not have to pay estimated tax for 2014 if you were a U.S. citizen or resident alien for all of 2013 and you had no tax liability for the full 12-month 2013 tax year. You had no tax liability for 2013 if your total tax was zero or you did not have to file an income tax return. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717372 Mon, 23 Jun 2014 20:53:05 +0000 allison 1717372@https://boards.hellobee.com/ <p>@gingerbebe: Thanks for your reply. It's really helpful to hear other people's personal experiences. My husband is seeming to err on the side of paying in less than 40%, but I just have a bad feeling about that. It's just a hard balance to find! I want to just know, for sure, how much to take out each month.</p> <p>Anyone know of a good accountant in Denver? :silly: </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717369 Mon, 23 Jun 2014 20:47:51 +0000 gingerbebe 1717369@https://boards.hellobee.com/ <p>Honestly I think the 40% number is about right. </p> <p>Technically, the taxes really depend on your income bracket, (basically whatever you would usually have withheld from your paycheck plus the employer side of SS and Medicare).</p> <p>BUT the difficulty in self-employment taxes is having the discipline to always set aside enough money, which is probably where the 40% figure comes in. After your first year of quarterly payments, it is recommended you pay a little bit more the following year's quarterly filings (in case your income goes up so you don't end up owing). If you overpay, obviously you get that back in the form of a refund.</p> <p>Another part of the 40% is having enough set aside to pay for your accountant. It is SO helpful to have one, I cannot stress that enough. It really is very complicated and they can get you all your deductions worked out for you and advise you on self-employment retirement options, etc. </p> <p>We use our accountant to do our tax filings in April, and then we pay them hourly to do a quick check-up on us in September to look over our books and see if we've been saving/paying enough based on what we've made so far that year. Our first year we had been saving 33% and we found out we were going to be short. Luckily, we had 6 months to save up the difference before April so it wasn't a huge shock later on. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717365 Mon, 23 Jun 2014 20:40:53 +0000 allison 1717365@https://boards.hellobee.com/ <p>@Mae: @MrsBeluga: What I've read is 25% for income taxes, plus 15% FICA etc. I don't want to underpay because I really don't want to have to pay in at the end! But I don't want to overpay by much either because we need that money.</p> <p>You're right, @Mae:, that I need to talk to an accountant. But that costs money, too! We paid our accountant so much money in tax prep the other time DH was 1099. It was painful. But I probably need to just bite the bullet and do it. I guess I just feel like I should be able to figure this stuff out, via the internet, which is what is frustrating me.</p> <p>@T.H.O.U.: I looked at the IRS site, but couldn't find anything to help give me actual numbers. I'm probably just not looking in the right places.</p> <p>Thank you guys for responding. I'm pregnant and due at the end of December, which means I'm sure I'll end up having the baby in January, which means so much more in healthcare expenses. We decided to have a baby when we were banking on Medicaid. Everything has been shifted so suddenly, and I'm having to adjust my expectations, and I'm just not handling the situation well. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717351 Mon, 23 Jun 2014 20:33:02 +0000 Mrs.Someone 1717351@https://boards.hellobee.com/ <p>I'm self employed and pay estimated taxes! 40% is a lot. The rule is to either pay in 100% of your previous year's liability, or 90% of what you expect that year's liability to be.</p> <p>BUT, I highly suggest getting someone to do them for you the first year at least. I got an accountant, though she didn't do a good job. The second year I went to HR Block who sits there with you, putting everything into the computer while explaining it all to you. It was so helpful, it made me confident preparing it myself that year. There is no obligation to file once you go through it all with them, so you can walk out of there for free if you aren't "happy" for some reason. I wasn't happy with the high fees they wanted to charge me for it (they couldn't give an estimate beforehand), so I walked out of there free with the agent's blessing since he agreed it was really high. From there, I took my new knowledge to TurboTax and have been using it ever since. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717337 Mon, 23 Jun 2014 20:21:08 +0000 MrsBeluga 1717337@https://boards.hellobee.com/ <p>It's what you would normally pay: federal, state, Medicare, and social security, which for many folks ends up being around 25% of a paycheck... Plus the employer paid Medicare and social security taxes, an additional 7.65%. So more like closer to 30-35% should be withheld. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717332 Mon, 23 Jun 2014 20:17:26 +0000 cmomma17 1717332@https://boards.hellobee.com/ <p>I have no idea personally, but I wanted to bump it for you! Good luck! </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717330 Mon, 23 Jun 2014 20:17:02 +0000 T.H.O.U. 1717330@https://boards.hellobee.com/ <p>I think the IRS.gov should have a calculator. </p> <p><a href="http://www.irs.gov/Individuals/Self-Employed#obligations" rel="nofollow">http://www.irs.gov/Individuals/Self-Employed#obligations</a> </p> <p>How Do I Make My Quarterly Payments?<br /> Estimated tax is the method used to pay Social Security and Medicare taxes and income tax, because you do not have an employer withholding these taxes for you. Form 1040-ES, Estimated Tax for Individuals (PDF), is used to figure these taxes. Form 1040-ES contains a worksheet that is similar to Form 1040. You will need your prior year’s annual tax return in order to fill out Form 1040-ES.<br /> Use the worksheet found in Form 1040-ES, Estimated Tax for Individuals to find out if you are required to file quarterly estimated tax.<br /> Form 1040-ES also contains blank vouchers you can use when you mail your estimated tax payments or you may make your payments using the Electronic Federal Tax Payment System (EFTPS). If this is your first year being self-employed, you will need to estimate the amount of income you expect to earn for the year. If you estimated your earnings too high, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter. If you estimated your earnings too low, again complete another Form 1040-ES worksheet to recalculate your estimated taxes for the next quarter.<br /> See the Estimated Taxes page for more information. The Self-Employment Tax page has more information on Social Security and Medicare taxes. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717329 Mon, 23 Jun 2014 20:16:48 +0000 Mae 1717329@https://boards.hellobee.com/ <p>You should talk to an accountant to figure out what your specific situation will be. I have been a 1099 for the last 6 years and I got an accountant in year 2 because it was way too hard alone. I'm guessing the 40% was just an over-estimation to make sure that you're covered.... but that could be right if your husband will be a high earner. </p> <p>For me, my taxes = my federal tax rate + my state tax rate + my local tax rate + 6.725%. </p> <p>So basically it is what I'd pay with an employee job, + a flat 6.725%. That part is the "employer" contribution to social security, because when you're a 1099 you are both the employee and employer. </p> <p>Also though, depending on the type of work, you may have more deductibles since he will be self employed. </p> https://boards.hellobee.com/topic/anyone-with-experience-with-self-employment-taxes#post-1717311 Mon, 23 Jun 2014 20:07:30 +0000 allison 1717311@https://boards.hellobee.com/ <p>So right now, we are pretty poor, income-wise. My husband works two part-time jobs and makes about $2500/month. So obviously, we qualify for pregnancy Medicaid, and our son also qualifies. Additionally, we get a GREAT insurance policy through the Marketplace, for like $25/month.</p> <p>Husband is potentially getting a new job. It's a great opportunity with a huge jump in income, but requires us to move across the country AND it's currently a 1099 job. They're hoping to transition to employee-based, but no set date for that to happen yet. I've been reading up on it, and it seems that we should withhold 40% of income for taxes?! Add to that the additional cost of living (we don't pay rent now, and will when we move) plus health insurance expenses, and we're looking at the same or less a month, net, than we're making now.</p> <p>Is there something I'm missing with this scenario? Please help! Or tell me where to go for help, because I can't find a whole lot via Google. </p>