Originally Posted by verma.manita
Where did you get ("15.#% of self employment tax on your net earnings that is $400 or exceeds $400")? How much estimated taxes will I pay if IC?
OK, aslongas the amount reported on your Sch SE line 2 / 3 is $400 or excceeds $400 then you MUST pay SECA taxes;SECA tax is a tax consisting of Social Security and Medicare taxes primarily for individuals who work for themselves, Ieman an IC or a self employer or etc It is similar to the Social Security and Medicare taxes withheld from the pay of most wage earners.the self-employment tax rate is 15.3%. The rate consists of two parts: 12.4% for social security (old-age, survivors, and disability insurance) and 2.9% for Medicare (hospital insurance).ALSO basicaaly as an IC , aslongas the amt reported on your SCh C of 1040 line 29 / 31 is also $400 or exceeds $400 then youmust file your return as an IC.
ESt taxes;as said you need to pay taxes on your net earnings NOT onyour gross income, your net earnings are reporterd on sch c lline 29 // 31 assaid above. So,If you are filing as a sole proprietor, an IC, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1K or more when you file your return.however, You do not have to pay estimated tax for the current year if You had no tax liability for the prior year; You were a U.S. citizen or resident for the whole year; Your prior tax year covered a 12 month period.
aslonmgas your tax lability after refundable/nonrefundable credits ot taxes w/h is low then even if you donot pay your qyarterly estiamted taxes, your penaltiies and interest are low, so many sekf employers never pay estiamted taxes due to lower penalties and interest as sasid, however, it is up to yo. let me give you a tip for est taxes payments.
you will avoid penalties/interest aslongas you owe less than $1K, i mean the amt on 1040 line 75 for 2014, in tax after subtracting their withholdings and credits, or if you paid at least 90% of the tax for the current year,estimated tax I mean, or 100% of the tax shown on the return for the prior year, whichever is smaller