Re: RE: Taxes & Deductions for Independent Contractors

Subject: Re: RE: Taxes & Deductions for Independent Contractors
From: Susan W. Gallagher <sgallagher5 -at- cox -dot- net>
To: "Nuckols, Kenneth M" <Kenneth -dot- Nuckols -at- mybrighthouse -dot- com>, <ekarenski-techwrl -at- yahoo -dot- com>, <techwr-l -at- lists -dot- techwr-l -dot- com>
Date: Thu, 23 Mar 2006 14:36:44 -0500

<disclaimer>I am not a lawyer or a tax accountant</disclaimer>
AFAIK, there is no hard and fast requirement to pay quarterly
estimated tax -- the only hard and fast rule is that all
owed taxes must be paid by April 15. I went from paying a
huge lump sum to filing no quarterly estimates when I
transitioned back to full time 3 or so years ago.

>From the IRS website:
---begin quote---
Who Must Pay Estimated Tax
If you had a tax liability for 2005, you may have to pay estimated tax for 2006.

General Rule
You must pay estimated tax for 2006 if both of the following apply.

You expect to owe at least $1,000 in tax for 2006, after subtracting your withholding and credits.

You expect your withholding and credits to be less than the smaller of:

90% of the tax to be shown on your 2006 tax return, or

100% of the tax shown on your 2005 tax return. Your 2005 tax return must cover all 12 months.
---end quote---

In other words, if you don't expect to owe more than $1,000,
you don't need to file estimates.

You can find more here:

-Sue Gallagher

> Tax year 2005 was the first year I had to file as a 1099 contractor, and
> as of January 30, I'm now a "real" employee at my company earning a
> salary, getting benefits, and having income withheld via normal W-2.
> However, because I had to pay a large lump sum of non-withheld taxes
> now, I have been told I need to pay quarterly estimated taxes for all of
> 2006, even though I'll have taxes withheld by my employer from February
> to December...


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