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Old 09-26-2017, 03:11 PM
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Exclamation [Question] Independent contractor working for the first time in US

Hey guys,

I am new to the Country and I have not filed taxes before. I am a self-employed independent contractor and I need your help in the below questions. Thanks in advance.

Background about me:
  • I got my US green card in June 2015 and as soon as I received my green card, I left the US.
  • Prior to 2015, I have I have not lived in the US.
  • For the remaining calendar year in 2015, I was not a resident in the US & I didn?t have to file my taxes
  • For the calendar year 2016, I moved back to the US (New York) in June 2016. I didn?t file my taxes for 2016, as I was unemployed for the entire year.
  • I got a job in July 2017 as a self-employed independent contractor (in California).

Questions:
  1. Question 1 - I understand that I have to pay advance taxes per quarter? So, considering that I started working in July, I need to pay in September or October?
  2. Question 2 - Am I exempt from paying advance taxes now/in 2017, because I didn?t have to pay tax in 2016 (as I was unemployed)?
  3. Question 3 - As I am paid ?hourly? and assuming that I made $10,000 from July to September end. How do I estimate my taxes (considering that I reside in California)? Can I take approx of 30% of $10,000 as advance taxes and pay that quarterly?
  4. Question 4 ? I am planning to open a SEP-IRA or Solo 401-K account soon. Do I need to deduct my contribution for SEP-IRA or Solo 401-K while making advance taxes, or am I not allowed to do that now and wait for the refund when I file my 2017 taxes?
  5. Question 5 ? In line with question 4, I understand that being a self-employed independent contractor, I am allowed to take some deductions like car miles, food, rent etc. Do I deduct this while making advance taxes, or am I not allowed to do that now and wait for the refund when I file my 2017 taxes?
  6. Question 6 ? Can I pay advance taxes monthly instead of quarterly going forward?

Thank a ton!!!



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Old 09-26-2017, 09:40 PM
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Note: during June 2016 to June 2017, I was staying at my brother's place and he declared me as a dependant for his 2016 tax return.



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Old 09-28-2017, 09:29 AM
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Posts: 4,838
Question 1 - I understand that I have to pay advance taxes per quarter? So, considering that I started working in July, I need to pay in September or October?=======>it depends; Individuals, including sole proprietors, partners, and S corp shareholders, generally have to make estimated tax payments if they expect to owe tax of $1k or more when their return is filed.
Corps, I mean if you set up your biz as a C corp, generally have to make estimated tax payments if you expect to owe tax of $500 or more when your return is filed.but You don?t 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.




1. Question 2 - Am I exempt from paying advance taxes now/in 2017, because I didn?t have to pay tax in 2016 (as I was unemployed)?=======>as mentioned previously.

Question 3 - As I am paid ?hourly? and assuming that I made $10,000 from July to September end. How do I estimate my taxes (considering that I reside in California)? Can I take approx of 30% of $10,000 as advance taxes and pay that quarterly?======> To calculate how much your estimated quarterly tax payments will be, first, you need to estimate your expected agi , taxable income, deductions, and credits for the year. One way to do this is to use your income, deductions, and credits from last year as a guide.
Once you have estimated these figures, it?s a simple matter of applying a few, simple calculations to figure out how much you?ll owe in your estimated quarterly tax payments. The Estimated Tax Worksheet found in Form 1040-ES will guide you through these calculations in detail.




2. Question 4 ? I am planning to open a SEP-IRA or Solo 401-K account soon. Do I need to deduct my contribution for SEP-IRA or Solo 401-K while making advance taxes, or am I not allowed to do that now and wait for the refund when I file my 2017 taxes?=========> as a Sole proprietor, you can deduct contributions for themselves on your individual tax return on IRS Form 1040, on your return by reporting it on form1004 line 28.


3. Question 5 ? In line with question 4, I understand that being a self-employed independent contractor, I am allowed to take some deductions like car miles, food, rent etc. Do I deduct this while making advance taxes, or am I not allowed to do that now and wait for the refund when I file my 2017 taxes?========> you may claim those bix reatd expenses on your 1040 whenyou file your return on apr 15 2018
4. Question 6 ? Can I pay advance taxes monthly instead of quarterly going forward?=====>nope



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Old 09-28-2017, 09:44 AM
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Quote:
Originally Posted by rmjseeds View Post
Note: during June 2016 to June 2017, I was staying at my brother's place and he declared me as a dependant for his 2016 tax return.
Sinc eyour bro is claiming you as a dependent, you might need to do your own taxes. the IRS requires that you file a tax return of your own If you earned more than $6,300; You have more than $1,050 of unearned income such as interest or dividend or etc. Your gross income was more than the larger of (a) $1,050 or (b) your earned income (up to $5,950) plus $350.
? You had net earnings of at least $400 from your business or self-employment.
? You had tax taken out of your paychecks and you want it back.



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Old 09-28-2017, 05:02 PM
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Quote:
Originally Posted by Wnhough View Post
Sinc eyour bro is claiming you as a dependent, you might need to do your own taxes. the IRS requires that you file a tax return of your own If you earned more than $6,300; You have more than $1,050 of unearned income such as interest or dividend or etc. Your gross income was more than the larger of (a) $1,050 or (b) your earned income (up to $5,950) plus $350.
? You had net earnings of at least $400 from your business or self-employment.
? You had tax taken out of your paychecks and you want it back.
So considering that I didn't have a tax liability in 2016 (even though I was declared as a dependent under my brother tax return), I don't have to pay taxes in 2017.

I guess I don't have to do anything for now.



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Old 09-28-2017, 08:30 PM
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Quote:
Originally Posted by rmjseeds View Post

#1So considering that I didn't have a tax liability in 2016 (even though I was declared as a dependent under my brother tax return), I don't have to pay taxes in 2017.

#2;I guess I don't have to do anything for now.
.#1; then you do not need to pay quaretrly estimated taxes in 2017 for 2017 tax year aslongas you had no tax laibility for 2016 and you were a US resident and lived in US for the whole 12months in 2016. or Unless you had taxable income and tax laiiblity in 2016, you donot need to pay estimasted taxes in 2017. however, as said previously, even if you are claimed as a depednent by your bro, aslongas You had net earnings of at least $400 from your business or self-employment, then youneed to fiel your return. for example, aslongas the amount on your Sch C line 27/ 31 is $400 or erxceeds $400 then you must fiel your return even though you are a depednet of your bro also aslongas the amount on your Sch SE line 2 / line 3 is also $400 or exceeds $400 then you need topay self employment taxes to IRS

#2;as said as a self employer (even if you are claimed as a depednet of your bro)aslongas the amount on your Sch C line 27/ 31 is $400 or erxceeds $400 then you must fiel your return even though you are a depednet of your bro also aslongas the amount on your Sch SE line 2 / line 3 is also $400 or exceeds $400 then you need topay self employment taxes to IRS



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