| “1) Do I only pay on the income that has not already been taxed, or do I include all income up to this point?”-----> As an independent contractor, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. However, you do not have to pay estimated tax for the current year if you had no tax liability for the prior year; you were a U.S. citizen or resident for the whole year; your prior tax year covered a 12 month period. As long as the amoun ton SCh C of 1040 line 29/31 is $400 OR EXCEEDS $400 THEN YOU MUST FILE YOUR RETURN AS AN ic AND ASLONG AS THE AMOUN TON LINE 4 OF Sch SE is also $400 or exceeds $400, then you must pay self-employment tax to the IRS.
“2) I am married and we have filed jointly in the past. Do I include his income in these estimates?”----->You, as an IC, need to report your own self employmemt income on your own Sch C/Sch SE and 1040; as long as your spouse is also an IC, he needs to report his self employment income on his Sch C/Sch SE and on 1040 UNLESS both of you operate same business;as long as You and your spouse may operate a personal business as an MMLLC, I mean as a joint venture, then you can file either separate or one Sch C/Sch SE.
“I already met with a tax professional and the estimates he gave me seemed very high (to the point where working as an IC doesn't seem to make sense).”------>You can deduct 50% of your self employment tax on your return on 10-4 line 27;also you can get refund as long as the amoun ton 1040 line 72 is larger than the amount on line 60. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller. Look at two crucial lines on your tax return: your total tax and your withholding. On Form 1040, this would be lines 60 (total tax) and 61 (withholding).Subtract the two figures. Total tax minus withholding. The result is your unfunded tax liability. 4.Divide this figure by four (if you want to make quarterly payments) or by twelve (if you want to make monthly payments). 5.Estimated tax payments are due by April 15th, June 15th, September 15th, and January 15th. 6.If you expect your income to increase or to decrease significantly, you may want to calculate your estimated taxes using your projected total income.As you are self-employed, don't forget to estimate both your regular income tax and your self-employment tax. The sum of your reg tax liability and self employment tax is your total tax liability.
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