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Hello, I quit a salaried job back in April 2017 through which I'd earned maybe $35K in 2017. My employer withheld federal tax on those earnings. I've since created an LLC to do a little consulting and will earn less than $10K for the remainder of the year. I'll be filing as single for 2017.
My question - since I'm earning less than $10K which is about the minimum required to file, do I need to worry about estimating quarterly withholding? Or will the IRS expect me to pay quarterly withholding on the ~10K since my total income will end up in the $45K ($35K of which already has withholding against it.)
I'm not an expert, but know they look at the whole picture for the year when doing the calcs. So you would be safer sending in that 4th quarter based on the 45K. IRS likes to collect penalties from the uninformed. As a first year retiree, I learned this the hard way when I no longer had an employer handling all that background stuff.
It sounds to me like during 2017 you are projecting to have a total of $45k of taxable income [$35k from your employer and $10k from your LLC].
I would assume that your LLC will also have a bunch of write-offs so your actual AGI will be much less.
You employer also paid into your SS account. Has your LLC been paying into your SS? You really want some payment to be made into your SS, every quarter.
If you should become disabled at any time, or if you live to become elderly, you will want your SS contributions to have been consistent. You do need to make your estimating quarterly withholdings.
Hello, I quit a salaried job back in April 2017 through which I'd earned maybe $35K in 2017. My employer withheld federal tax on those earnings. I've since created an LLC to do a little consulting and will earn less than $10K for the remainder of the year. I'll be filing as single for 2017.
My question - since I'm earning less than $10K which is about the minimum required to file, do I need to worry about estimating quarterly withholding? Or will the IRS expect me to pay quarterly withholding on the ~10K since my total income will end up in the $45K ($35K of which already has withholding against it.)
Regards,
Will
You need to pay self-employment taxes SS+Medicare.
For estimated payment:
"If you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. 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"
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