Today TaxMama hears from Trisha in the TaxQuips Forum with good news. She says, “Recently I took a contract job starting out as a 1099 self-employed contractor. After 6 weeks, the company asked me to come on board permanently as a W-2 employee. I was taking out my own taxes for the first 6 weeks while being a 1099 and putting that into a savings account with the intention of setting up fed and state payments. Since I was only in the 1099 status for 6 weeks, do I need to go through all the drama of making estimated tax payments? Or can I just file them with my regular taxes?”
Good question. And congratulations on getting hired permanently. That says a lot about your skills.
You’re right. You don’t need to go through the pain of making estimated tax payments.
Just do a projection of how much your total tax will be for IRS and state. Take into account the self-employment taxes you will have to pay on that 1099 income. Then adjust the withholding from your paycheck to pay all those taxes between now and December.
Ta Daa! You’ll be fine when April comes around.
And remember, you can find answers to all kinds of questions about estimated tax payments and other tax issues, free. Where? Where else? At www.TaxMama.com.[Note: If you were subscribed to the e-mailed TaxQuips, you’d be getting other exciting news and tips by e-mail, that never appear on the site. Please click on the join TaxMama.com link – it’s free!]
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