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Old 11-25-2009, 05:47 AM
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How do I pay self employed taxes??

I am starting a daycare in my own home. How do I pay my self employment taxes? I need to know everything about this stuff. Can I pay it monthly, bimonthly ect ect? Where do I go to pay it? Do I go to the IRS? I am new to all of this and when I took the class to get licensed they didn't go over any of it. Which they should have. I don't want to end up owing money at the end of the year.



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Old 11-26-2009, 07:28 PM
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Your Daycare business is a self-employed business and you are correct in that any profit generated from this business is subject to both the regular taxes and self-employment taxes. The Self-employment tax (SE tax) is a combination of Social Security and Medicare tax primarily assessed for self-employed individuals or independent contractors.

The IRS requires that a self-employed taxpayer make what is known as “estimated tax payments” as the method used to pay their tax liabilities. These estimated tax payments are made on a quarterly basis and taxpayers may be penalized for any possible underpayment at the end of the tax year. The estimated tax payments are paid on a quarterly basis that follows the following schedule as follows below;
Here are the individual taxpayers estimated tax payment due dates for 2009 as follows;

First Installment---------Due Date is April 15, 2009
Second Installment------Due Date is June 15, 2009
Third Installment--------Due Date is September 15, 2009
Fourth Installment-------Due Date is January 15, 2010.

Generally speaking, taxpayers must make estimated tax payments if they expect to owe at least $1,000 in tax for 2009 (after subtracting for any possible federal income tax withholdings and tax credits) and they expect that their withholdings and credits to be less than the smaller of:

1. 90% of the tax shown on the 2009 tax return.
2. 100% of the tax shown on the 2008.

The IRS requires that taxpayers submit their estimated taxes using a 1040 –ES payment voucher. These vouchers have the mailing instructions. You can access further instructions on subject of estimated tax payments by clicking on the following IRS link as shown below.

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

In addition, you indicated that you do not wish to owe any taxes at the end of the tax year, in this case, you should contact your Tax Preparer and inform them that you wish to pay your taxes with your 4th quarter estimated tax payment. Your tax accountant will then project a 12 month profit for your Daycare and based on the anticipated profit, he will be able to determine your 2009 projected tax liability and this would be the amount that would need to be paid during 2009. Thus, the 4th quarter 1040-Es payment voucher should have an amount included that would pay the balance of the projected tax liabilities computed by your tax accountant.

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