The Motley Fool Discussion Boards

Previous Page

Financial Planning / Tax Strategies


Subject:  Re: Self-Employed Tax Payments Date:  2/15/2008  3:42 PM
Author:  vkg Number:  98737 of 131364

The first commission probably wasn't sufficient to create a need for an estimated tax payment. You did have two choices in December, make an estimated tax payment or pay the penalty and pay the balance with your tax return.

There does seem to be a lack of communication with your tax preparer. You didn't get the answer on how much of an estimated tax payment to make in January.

Form 2210 is used to handle underpayment penalty on inconsistent income. If it isn't filed, the income is assumed to be evenly earned for each quarter. Filing it will minimize the underpayment penalty. Since it is now late Feb and you will probably be filing soon, it is unlikely to be worth the effort to make an estimated tax payment.

You also need to determine how much of the commissions are taxable income. It is possible that she has expenses to write off against the income. Self-employment taxes apply only to the taxable income.

Copyright 1996-2020 trademark and the "Fool" logo is a trademark of The Motley Fool, Inc. Contact Us