A taxpayer is required to pay 4 quarterly installments towards his or her 2009 Tax Liability. Now, your Self-Employment tax is only applicable if you will realise a profit for your trade or business in 2009.
Clearly, the question you should have is whether or not you are required to make estimated tax payments for 2009! According to the IRS, a taxpayer must pay estimated tax for 2009 if both of the following apply.
1. You expect to owe at least $1,000 in tax for 2009, after subtracting your withholding and credits.
2. You expect your withholding and credits to be less than the smaller of:
- 90% of the tax to be shown on your 2009 tax return, or
- 100% of the tax shown on your 2008 tax return. Your 2008 tax return must cover all 12 months.
The S/E tax is assessed at 15.3% of your net self employment income, and in addition you would be subject to your ordinary income tax rate on the same net self employment income.
The aggregate of the S/E tax liability plus your regular tax is amount that needs to be paid to the IRS on a quarterly basis according to the schedule established by the IRS as shown below;
- First Installment due date-April 15, 2009
- Second Installment due date-June 15, 2009
- Third Installment due date-September 15, 2009
- Fourth Installment due date-January 15, 2010
The estimated taxes are paid using a 1040-ES voucher, which is Form that would contain all the taxpayers pertinent tax information such as their name, address, SSN and the amount of tax payment that is mailed to the IRS. You can assess both the tax forms and instructions to complete this form by clicking on the link shown below; http://www.irs.gov/pub/irs-pdf/f1040es.pdf
I would also suggest that you should consult your CPA to help you determine the correct amount of the projected tax liability in order to avoid any underpayment tax penalties. I am hoping that helps you in determining whether or not you are required to make an estimated tax payment and how this amount is calculated.