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Thread: New Independent Contractor & Lost As Far As Calculating Estimately Quarterly Payments

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    Question New Independent Contractor & Lost As Far As Calculating Estimately Quarterly Payments

    Hello. I am 38 yrs old and have been on my own and working full time since the age of 14. I have always done my own taxes end of Jan as soon as my W2s came in and have always used the 1040EZ form. I've found it to always be very easy. This year is different.... I GREATLY appreciate anyone who can help me and I am open to hearing more than one answer so if someone already put their 2 cents in, please add yours if you think you can help.

    From Jan until April I worked full time for a company as I always have. I was laid off in April, collected unemployment from April until now and started a job as an independent contractor.

    I've been reading up on how my taxes will be different now which includes paying all my SS and Medicare tax ( I never knew employers often pay 1/2 of these for employees)

    I also read that I will need to make estimated quarterly payments to the IRS and this is where the confusion comes in and I'm hoping for some help. Ive contacted some tax places who gave me completely different answers which added to the confusion.

    My main goal is to keep the IRS happy and not get an audit. It I over pay and get some back later its fine. If I under pay and have to pay more later its fine.

    One of the things I read was to use what I paid in taxes last year as a guide for making my quarterly payments and if I use the amount of 100% of what I paid in taxes last year and divide 4 for my quarterly payments the IRS will be happy.

    Here is where I am stumped:

    1. Am I calculating the amount I paid in federal taxes last year minus what I got back? (I paid about 2,750 in federal and got back about 1,125 meaning my total due responsibility to IRS was 1625. Am I go by the 1625 for figuring my estimated quarterly payments?

    2. REALLY stupid question but for the Federal, Social Security and Medicare tax I owe, does it all get paid in one check to IRS for each payment? I've never separately paid SS or Medicare (its always just been taken out of my pay check) or gotten a refund on them in the past so that is one spot where I'm a little confused. I didn't know if my payments go to separate departments or it all goes to IRS.

    3. If I'm figuring the Social Security & Medicare that as paid last year so I know how much IRS expects for the estimated quarterly payments am I going by the amount I see on my w2s showing the total that was taken out of my paychecks OR am I taking that amount from what was taken out of my paychecks and multiplying it by TWO since my bosses essentially paid the other half. I understand I need to pay double what I used to now that the boss isn't paying half but am I expected to pay that double amount to satisfy the IRS estimated quarterly payments or just go by what was sucked out of my pay checks?

    I hope that all made sense. Thanks!
    Last edited by Straightbangin; 07-13-2017 at 11:51 PM.

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    I haven't done it myself for a while but yes, you file your quarterly estimates as a lump sum. I believe it is a 940ES form. You will file your taxes with a Schedule C and a 1040.
    Ray Badger, Turbo Technologies, Inc.
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