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Ms. Jenn
Fresh, Hot & Wild
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Joined: 14 Feb 2004
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Location: Suite 550
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 Posted: 09/23/05 - 08:23 Post subject: I need free tax advice...
HELP! I'm asking the Riff Raff to avoid a $250 charge from my personal accountant because I think I have solved my problem already.
I will be consulting at my new job, i.e., working for myself not the company where I'll be located. The company will pay me through payables and not payroll and I'll be responsible for my own taxes.
I know I'll need to pay self employment taxes on that money (already figured from the IRS documents). I have also figured what the normal FICA, FUTA, Medicare and SS taxes will be on the estimated income. I plan to send the amount I figured up so I don't have to pay a penalty on my 2005 taxes in April 2006.
I've figured the tax #'s based on the self employment income only and as if there will be no deductions.
My questions:
1. DH says I'm responsible for both the employee and employer portion of FICA, FUTA, Medicare and SS taxes, which is double the amount I've already figured in addition to the self employment tax.
2. I believe the self employment tax covers the normal medicare and SS taxes taken out in everyone's normal payroll. I belive that if I pay self employment tax in addition to the other three tax dollars I've calculated, it will work out.
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prohemp
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Joined: 14 May 2002
Posts: 7716
Location: in the cradle of liberty
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Posted: 09/23/05 - 09:30 Post subject:
Jenn, It's been years since I've done personal income tax regularly but here goes:
Use schedule C to report your consulting income. The net income from schedule C is used to compute your net earnings for self employment tax purposes (92.35% X net income - I think - better check that percentage) on schedule SE.
The SE tax does include employer AND employee portions of payroll taxes - which would be 15.3 % (12.4 for SS and 2.9% for medicare). Report this amount on page 2 of your form 1040.
However, you also get to report half of SE tax amount (the employer portion) as a deduction on form 1040.
PM me if that's not clear.....as mud 
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Ms. Jenn
Fresh, Hot & Wild
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Posted: 09/23/05 - 09:49 Post subject:
| prohemp wrote: | Jenn, It's been years since I've done personal income tax regularly but here goes:
Use schedule C to report your consulting income. The net income from schedule C is used to compute your net earnings for self employment tax purposes (92.35% X net income - I think - better check that percentage) on schedule SE.
The SE tax does include employer AND employee portions of payroll taxes - which would be 15.3 % (12.4 for SS and 2.9% for medicare). Report this amount on page 2 of your form 1040.
However, you also get to report half of SE tax amount (the employer portion) as a deduction on form 1040.
PM me if that's not clear.....as mud |
It's very clear. You gave me the information I needed. I was positive the amount I calculated I needed to "pay" (read set aside until December) per week would be more than enough.
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jrjo
Gone Fishin
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Joined: 15 May 2002
Posts: 16451
Location: Lake Wobegon, MN
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Posted: 09/23/05 - 09:55 Post subject:
Yep, just like Phemp points out, you end up paying 'double' to make up for the employer portions. What you'll need to do between now and April is make quarterly deposits. If you'll get everything paid here in the 4th quarter, then you'll have until 1/17/06 to get your deposit made.
http://www.irs.gov/pub/irs-pdf/f1040es.pdf
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airehead
Oompa Loofah
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Joined: 12 Nov 2002
Posts: 18788
Location: Between here and eternity...
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Posted: 09/24/05 - 20:49 Post subject:
mmmmm.....donuts......
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j1miller
Puppy Love!
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Joined: 07 Jul 2002
Posts: 15447
Location: Lost on trail.
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Posted: 09/24/05 - 21:03 Post subject:
I love tax stuff...... It's part of what I do all day, too.
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thooogy
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Joined: 16 Jul 2005
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Posted: 09/24/05 - 22:42 Post subject:
What I wanna know is:
Your accountant really charges $250 to do that return? Damn, I get $150 for the same situation ...1040 w/ sched A, B, C, SE; IT-201 (NY). I gotta raise my prices!
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Ms. Jenn
Fresh, Hot & Wild
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Joined: 14 Feb 2004
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Posted: 09/25/05 - 10:12 Post subject:
| thooogy wrote: | What I wanna know is:
Your accountant really charges $250 to do that return? Damn, I get $150 for the same situation ...1040 w/ sched A, B, C, SE; IT-201 (NY). I gotta raise my prices! |
My husband has a small flight company and when we hired him we also had an inheritance that was taxable, school deductions and I didnt' want the stress. He actually charges $400 for our return. We got charged an extra $110 last year for an amended return because a 1099 arrived after we had filed our 1040.
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