Taxes and 1099 revenue

Hello all, 

This year almost all of my income will be listed on 1099's for which I have had nothing withheld and made no payments.  I will be fine with paying the appropriate amount at the time of filing, but I'm wondering if I could be responsible for fees or penalties for not having paid anything during the calendar year.  

If so what amount could I be looking at?  Should I do some quick math and make a payment now?  What about SS contributions?  I'm open to consulting with (and paying) a professional if the group thinks that is warranted and can recommend someone trustworthy.  

Thanks.

I got hit with penalties some years ago for not making an estimated quarterly payment. It was a painful amount, as I recall. I think paying a pro would be a good idea, but can't recommend anyone.

Thanks Kthrny.  I guess my next question to the group would be what the fee for such a professional might be.  If it's comparable to the fine I might pay for not making any payments  I would probably just take my chances.  

You will probably owe an underpayment penalty.  If you use Turbo Tax, it will calculate the penalty for you.  Otherwise, IRS will be glad to bill.  However, IRS will assume (and Turbo Tax seems to, as well) that you received the income evenly over the year, so if it was actually tipped more toward the end of the year, you or a pro might be able to reduce the penalty.

You likely will also owe self-employment tax (social security) at 15.3%? of the first $xxx.  The underpayment penalty also applies to the SE tax, iirc.

Actually, this is all "iirc," as it's been a while since I looked at taxes all the time.

See Marco DeLuca in Maplewood. He's your man.

You will owe a penalty/interest for not paying quarterly estimated tax.  You should have made a payment every quarter based on what you expect to owe.  That said, if you have a fairly simple return and you have good records of your gross income and business expenses, you should be able to use commercial tax software to get it done and it will calculate the penalty/interest for you.  We use Tax Act and it has been very accurate for us.  The interest rate these days is not very high, so you should not expect this to be too bad. 

If this is your first time with these circumstances, you might not get a fine. You will be instructed to file quarterlies in future. IRS response may also vary depending on the amount of income under consideration.

Even if there is no fine, you will be responsible for federal income tax, state income tax, F.I.C.A. (SS) and medicare. Probably a total near 35 -40% of the income, minus deductions. If you have cash on hand, you can reduce some of the liability with a traditional I.R.A.

Yes, see an accountant. At least  you will get a better idea of what liability you face. Expect to pay $300 -500.

Yes, you will likely have to pay a penalty. I've paid a small penalty the past couple of years for not withholding enough. I suggest you quickly talk with an accountant before year's end or do the calculation.  If cash flow is not a problem then making a payment now will probably save money later.

Red_Barchetta said:

Hello all, 




This year almost all of my income will be listed on 1099's for which I have had nothing withheld and made no payments.  I will be fine with paying the appropriate amount at the time of filing, but I'm wondering if I could be responsible for fees or penalties for not having paid anything during the calendar year.  




If so what amount could I be looking at?  Should I do some quick math and make a payment now?  What about SS contributions?  I'm open to consulting with (and paying) a professional if the group thinks that is warranted and can recommend someone trustworthy.  




Thanks.