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Author: NaggingFool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308363  
Subject: Re: It does hurt sometimes Date: 8/31/2003 8:53 PM
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The payroll part is pretty straightforward, but when you get into self-employment it's not so automatic, you have to really be careful or you wind up having to take a personal loan at the year's end, to cover your tax bill.

Also, if you make enough money you have to pay quarterly estimated taxes, which I'm somewhat familiar with from my parents' business, but they could never tell me at what point your income's high enough for that to be required.


I was trying to explain (and doing a lousy job) a couple of things that are relevent to your situation.

If you end up owing the gov't more than $1000 come tax day you were supposed to have paid estimated taxes, and they'll charge you a penalty. (Not your total tax bill, your tax bill minus what you've already paid them. Witholding counts as already paying them. Sending them estimated taxes (on time) counts as already paying them) The safe harbor is an exception to this -- if you pay enough based on the previous year, you won't get penalized even if you owe more this year.

The gov't doesn't care how you pay them that money. So if you figure out in September that you should have sent an estimate tax payment in June, you can increase your witholding from the dress job to cover the mistake.

So, because you have a "payroll" type job as well you can avoid worrying too much about estimated taxes early in the year and use your payroll witholding to make up the difference.

Am I making any more sense yet?

- Megan
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