I have a full-time (W-2) job but also do freelance (1099) work on the side. Taxes are withheld from my W-2 job but are not withheld for my freelance work. How how much should I pay for my quarterly taxes (for both federal and NC)?
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4 Comments Received
July 31st, 2009 @4:01 pm
Look up 1040es. There will be instructions to calculate and complete the estimated tax forms.
Northa Carolina should have the same type of form. Browse the state website.
August 3rd, 2009 @3:27 am
The best way is to compute your YTD profit each quarter, then annualize it. Pay your ES each quarter based on the annualized profit.
To avoid penalty, you can make sure you pay in (through 4 equal ES payments and withholding) 100% of your prior year tax or 90% of your current year tax. Doing that, however, will not ensure that you will not be under or over paid at tax time.
August 5th, 2009 @1:03 pm
Cash is King, my friend!
August 5th, 2009 @11:44 pm
The estimated quarterly payment forms are rather clear about how to do this.
Alternatively, you could increase your withholding at your W-2 job and thus avoid the estimated payments. Figure out how much more you need withheld. Start by claiming 0 on W-4, and you may need to add additional amounts withheld with each paycheck depending on the amount of freelance/self-employment income. Keep good records of expenses and mileage to reduce your taxable income when filing your Schedule C.
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