Quarterly tax payments still needed if all Self-Employed income into Solo 401k?

[LivingTheDream34]

Hello!

Question on taxes for the self-employed community!

If I put all my self-employed income into an Individual 401k, do I still have to pay quarterly taxes?  When I pay my annual taxes, my bill will be $0 so not sure what the point is! Don't want to upset the IRS though :)

Thanks for any help!

[oldladystache]

If your total tax will be zero, that's what you have to send them. Zero. ( Or, no, you don't have to file quarterly. )

[MoseyingAlong]

You still pay self-employment tax (social security and Medicare) on self-employment income that you contribute to a solo 401k. So you might want to make quarterly payments for that.

[SeattleCPA]

You still pay self-employment tax (social security and Medicare) on self-employment income that you contribute to a solo 401k. So you might want to make quarterly payments for that.

+1

And actually you'll also pay income taxes on half the money used to pay the self employment taxes. So you will pay at least a little bit of income tax. Probably not enough to worry about... but still some.

E.g., if you pay $1000 of SE taxes, half of that amount is a deduction for income tax purposes and half isn't. On the half that isn't, you'll pay a little bit of income taxes. E.g., maybe $50 to $100 if your marginal rate is 10% to 20%.

[trollwithamustache]

As others have noted, you will owe some self employment tax and the Social Security type portions.

You are also supposed to pay taxes  within some reasonably close to as the income occurs... so an extreme example would be if you made 100k in Q1, but paid your estimated taxes in the following year April when you filed the annual return, the IRS would say you owe them a few extra bucks for waiting to pay.

So yeah, as others have noted if you pay a chunk every quarter, you've likely covered enough to meet this requirement. 

[Much Fishing to Do]

As others have noted, you'll likely still owe some taxes.  But I myself wouldn't worry about quarterly payments for something this small, the "penalty" is actually just interest on the days beyond when it was due.  This was tiny just a couple years ago, but I think with rates moving up might be more like 6% now, so up to u, but not a big deal either way. (I kinda see this as a corollary to all the folks that say over-withholding is giving the government a interest free loan when you could make money off of it instead...here not paying estimates is like taking a 6% loan from the government instead, which is about what we all think of as money being worth invested so kinda evens out).

In the end you waste time figuring and making quarterly payments or you waste time figuring your penalty....like most things with the IRS its just about wasting time one way or another, so pick your poison.....