How Do I Know if I Have to Pay Estimated Taxes?

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John (freelance writer) asks:

I work part-time as an independent contractor doing freelance writing. How do I know if I have to pay estimated taxes?

Answer:

If you earn income that is not subject to withholding (self-employment income, for example), you will have to pay estimated taxes if:

You expect to owe at least $1,000 in tax for the year after subtracting your withholding and credits, and
You expect your withholding and credits to be less than the smaller of a) 90% of the total tax shown on your current year's return, or b) 100% of the total tax shown on your prior year's return.

IRS Publication 505 (downloadable at www.irs.gov) has even more information on the topic.

For More Information, Take a Look at My Related Book.

Surprisingly Simple: Independent Contractor, Sole Proprietor, and LLC Taxes Explained in 100 Pages or Less

See it on Amazon now.

A testimonial from a reader on Amazon:

"Quick and easy read. No fluff, just straight to the point and gives you more helpful information that you might imagine. If you are looking to get the bottom line information you need to start your business right then this book is a must have." R.L. Muhammad

My Latest Book

Taxes Made Simple: Income Taxes Explained in 100 Pages or Less

Taxes Made Simple

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