How do you figure self employment taxes and charitable donations?

[davew128]

Still pretty minor Dave...in this instance the difference is less than 88 bucks.

I think I highlighted the applicable portion here.

 

[de3ik]

Still pretty minor Dave...in this instance the difference is less than 88 bucks.

88 dollars isn't minor to me at all, because I'm on a fixed income and have very limited funds. That would be a very big difference for me and I need to get this right. Whose figure is truly correct? Yours or Dave's? I really need to understand which figure is correct because if I'm off it would cost me money in my budget that I must account for.

Thanks for your help,

de3ik

 

[tranquility]

Dave's. But, I think you're missing the point.

 

[ecmst12]

It is not something you can attempt to calculate until you have actual income to calculate off of. That $88 is out of an income of $10k in a year, do you know what the chances of you making anywhere near that much are? Very small. So go out and do what you need to do. If/when you get a check, put a little of it aside for taxes, and a little more aside to spend on consulting a tax pro. Self employment taxes are supposed to be made quarterly, so after 3 months, THEN you look at how much you've made and figure out where to go from there.

 

[davew128]

Self employment taxes are supposed to be made quarterly

They are? First I ever heard of it.

 

[LdiJ]

They are? First I ever heard of it.

Come on Dave....people who are self employed are supposed to pay estimated taxes in most circumstances. Estimated taxes are paid quarterly. Those estimated taxes would certainly include any self employment tax.

Are you really going to continue to be this pedantic?

 

[tranquility]

Come on Dave....people who are self employed are supposed to pay estimated taxes in most circumstances. Estimated taxes are paid quarterly. Those estimated taxes would certainly include any self employment tax.

Are you really going to continue to be this pedantic?

As both dave128 and LdiJ know, the fact a person is "self-employed" is irrelevant to if estimated taxes are required. The purpose to be in a "safe harbor" to prevent being penalized for having too little taxes paid in at tax time. The first year of operation in "most" circumstances, a small business will have no requirements to pay estimated taxes if they didn't before. One safe harbor is paying in the same amount of taxes as the year before. This is the usual case for those starting a business absent unusual circumstances or having extremely pronounced...man parts. The pedantic may point out what happens if the amount of income earned is very high or the difference between withholding and estimated payments and their timings.

But, it is just one more fact for the OP to consider in the future and why a class or a book is more appropriate than bits of answers here.

 

[davew128]

Come on Dave....people who are self employed are supposed to pay estimated taxes in most circumstances. Estimated taxes are paid quarterly. Those estimated taxes would certainly include any self employment tax.

Are you really going to continue to be this pedantic?

I have clients where one spouse is self employed and the other draws wages. Surprisingly enough, withholdings from the wages covers the tax liability. Am I being pedantic? No, I'm pointing out that blanket statements in this field don't fit.

 

[de3ik]

Dave's. But, I think you're missing the point.

What point am I missing? Please explain this. I only asked because I wanted to know exactly what was going on and how it would apply to me. I know very, very little about taxes which is why I was asking to get more guidance.

 

[ecmst12]

The point is, none of it matters, and we can offer you very little guideance, until there is actually money that you earned. So earn the money first. Don't spend it all immediately. THEN you can determine how much tax you will owe and what the best way to pay it is.

 

[LdiJ]

I have clients where one spouse is self employed and the other draws wages. Surprisingly enough, withholdings from the wages covers the tax liability. Am I being pedantic? No, I'm pointing out that blanket statements in this field don't fit.

Then explain WHY they don't fit. Saying "first I ever heard of it" give the OP no context or any idea what you mean by that statement. I too have clients who choose to adjust the employed spouse's withholding to cover the other spouse's self employment so that they don't need to make quarterly payments. However that is kind of irrelevant for this poster as she does not appear to be married.

 

[de3ik]

Then explain WHY they don't fit. Saying "first I ever heard of it" give the OP no context or any idea what you mean by that statement. I too have clients who choose to adjust the employed spouse's withholding to cover the other spouse's self employment so that they don't need to make quarterly payments. However that is kind of irrelevant for this poster as she does not appear to be married.

I am not married no. Are you saying all self employment taxes are quarterly and the regular income taxes are annual only?

 

[LdiJ]

I am not married no. Are you saying all self employment taxes are quarterly and the regular income taxes are annual only?

No. Because a self employed person does not have an employer withholding taxes and sending them into the government, the self employed person is basically supposed to withhold on themselves. Which is why you would make quarterly estimated payments...AFTER you start having profits from your business.

Its not actual withholding but its the same principal as withholding. The government recieves the money as a "deposit" towards your annual income tax.