Forming S-corp: how to adjust estimated taxes based on self-employment

[sandhyaepeter]

What is the name of your state (only U.S. law)? IL

Hello,

I worked as an independent contractor last year. Now I am forming an S-corp to try to reduce some of the self-employment tax burden. However, I need to pay estimated taxes on April 15 based on my last year's tax. Since I will be working for the S-corp as an employee starting later this year, I think my estimated tax payment calculations will not be right. So how do I adjust my estimated taxes to match my future earnings? Any other relevant info on this situation is appreciated.

 

[davew128]

Hire a professional. You are in over your head.

 

[LdiJ]

What is the name of your state (only U.S. law)? IL

Hello,

I worked as an independent contractor last year. Now I am forming an S-corp to try to reduce some of the self-employment tax burden. However, I need to pay estimated taxes on April 15 based on my last year's tax. Since I will be working for the S-corp as an employee starting later this year, I think my estimated tax payment calculations will not be right. So how do I adjust my estimated taxes to match my future earnings? Any other relevant info on this situation is appreciated.

What you will need to do, is pay yourself a reasonable salary via the S-corporation, with proper withholding (using a payroll service is very cost efficient and easy) any profits over and above your reasonable salary will not be subject to self employment taxes.

Therefore, you only need to be concerned about estimated payments for the time period in 2009 that you were not an S-corp, and for whatever profit you anticipate having, over and above your salary.