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Old 09-15-2009, 11:30 PM
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Estimated Taxes for new SB owner

It is now 9/15/2009. I currently work for a firm as an employee. If I start a small business in 11/2009, would I have to pay the 4th quarter estimated taxes on 1/15/2010? If so, based on what? Based on the total tax I paid in 2008 as an employee divided by four? Thank you very much



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Old 09-19-2009, 08:24 AM
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You are right in that you would have to base the estimated taxes on the prior year income tax liability. Since you do not have any idea how much profit is going to be generated in the new small business, the only question I have is did you work during the year and was there sufficient federal income tax withheld on those wages earned during that time!

Clearly, if you think the business is going to be profitable and your AGI is going to be greater than the prior year then you would want to make an estimated tax payment in the 4th quarter. Please refer to the following link for additional guidance on this.

Can you please explain when a taxpayer is required to pay estimated taxes?

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Old 09-19-2009, 12:22 PM
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Thanks for the response. However, if I have enough money withheld from my wages this year and the withheld money is equal or more to tax liability of 2008, I dont even have to worry about how profitable the business is right?

Also, i have a 11,000 capital loss this year and I will be able to offset any capital gains and 3000 of ordinary income. I highly highly doubt that I will owe more than 1000 in taxes come 4/15/2010. I shouldnt have to worry about 4th quarter estimated payment then, right?

Thanks!



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