I recently began freelancing regularly and am trying to determine whether I'm required to pay quarterly estimated self-employment taxes. I'm reading confusing and conflicting information. Although I have freelanced in previous years, I never earned much 1099 income ($1k or less per year) and, therefore, just reported the income and deductions on my annual income taxes.
For 2015, I won't be reporting any self-employment income. I'm currently in limbo employment-wise and have no idea what my 2016 income will be. My questions are:
- Given my current (low) self-employment income, am I required to make quarterly payments?
- If so, would my first payment be due on April 18th or June 15th?
- How would I estimate these payments given that I had no self employment income the prior year? Would I just pay 15.3% of my estimated SE income for each quarter?
Here's what I know so far for 2016:
Tax status: Married filing jointly, child-free
W-2 income-Me: $8,003.70
- I left this job and am unsure if or when I will return to a W-2 position. If I return to a full-time W-2 position, I will likely reduce my freelancing.
W-2 income- Husband: Best guess is that he will earn no more than $35,000 in W-2 income for 2016
Other income- Husband: $3,792 in unemployment with taxes withheld
Other income- Investments: Variable, unlikely to be more than $3,000 after deductions
We will most likely be in either the 15% or the 25% tax bracket for 2016.Freelance income (Estimated when future earnings can be anticipated; actual to-date when they cannot):
Writing contract: $730 Will be paid out in increments between the end of March and beginning of June.
Tutoring: Best guess is ~$900 from the time I started (end of Feb) through the end of May. This income is a weekly direct deposit. I'm not anticipating tutoring in the summer and may not return in the fall if I'm working full-time.
Gig #1: $150 Not sure if this income is going to result in a 1099 or not. Would like to pick up more gigs with them but there's no guarantee that I'll qualify for any. (This income is through a market research firm.)
Gig #2: $90 The time to payment ratio is not working out well thus far, so I'm unlikely take more gigs with them.
Other miscellaneous: <$50 Very unlikely to get a 1099 or any other income statement from any of these.
Total gross self-employment income for Q1 2016 will be no more $1k.
Planned deductions: Internet ($66/month), A portion of the cell phone bill (Business share is ~$42/month), Office supplies (So far, this is printer ink. Not sure what else I'll end up applying here.), Home office (Haven't figured this out yet. Home is owned outright and utilities are low, so it wouldn't be much.)
I'd really like to avoid having to pay estimated quarterly taxes if at all possible. I have filed our federal and state income taxes myself using TurboTax for the past 3 years. If I have to make quarterly estimated self-employment tax payments, I will have to calculate the amount and file them myself, as I'm not generating enough income to pay for a program/service. Potentially owing taxes at the end of the year is not a huge problem. We have owed additional federal taxes as W-2 employees for the past 4 years. (We were relatively high earners with no children and few sizable deductions.)
Having a tax bill at the end of the year isn't a major issue; I just don't want to have to pay a penalty. Any thoughts or advice would be much appreciated. Thanks!