1099 and Estimated Payments

If you expect to satisfy the safe harbor rule, as you say above, then you don't need to make an estimated payment.

Your tax bracket x $5,000.

Or you could give your regular employer a new W-4 to increase your withholdings for the rest of the year (either by reducing the number of allowances, or by filling in the "additional tax to withhold" field).

-- Barry Margolin, snipped-for-privacy@alum.mit.edu Arlington, MA

You will report the income and your 2007 expenses on your

Assuming your 2006 AGI was under $150,000 the figure from your 2006 return that you must match in 2007 withholding is "total tax." Do that and you'll have no penalty regardless of how much you owe come April 15, 2008. Your state may have different rules. For example, in Maryland it's 110% of last year's tax regardless of AGI. You have plenty of time to adjust your withholding if it looks like you'll need more. That's an easier route than making ES payments. Do put about half the $5,000 where you can find it April 15. That way you'll be sure you have what you need to pay what's due.

-- Phil Marti Clarksburg, MD

"wrldruler" wrote

You may want to compute 110% of last years tax bill, subtract your estimated withholding amount, round it up to the nearest....whatever, and send that amount in. In other words, meet the 110% test to be safe. The remainder you should be absolutely sure to set aside and pay in April with the return. Remember that your $5K of income will see allowed business expenses that you incur in generating that income, whatever those may be, and it's possible that you'll show losses. So you'll most likely not see $5K of net profit from this business activity.

-- Paul A. Thomas, CPA Athens, Georgia

Your total withholding in 2007 should equal your 2006 tax to avoid a penalty. See IRS form 2210. Increase your withholding to meet that safe harbor instead of making a

You need to cover 100/110% of last years tax, or 90% of current year. The 90% of current year can be an annualization calculation. Don't forget about your state. Each state has its own requirements. If you need help calculating the quarterly Fed & state estimated payment amounts, contact your CPA/tax advisor. One important thing you forgot is to record your legitimate business expenses against this income. ___________________________________

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