1099 Consulting - two questions

wrote

The 1040ES is just a payment coupon used to make your estimated tax payments. I suspect the IL1040ES is the same, just a coupon. If you are required to make payments of estimated taxes, you use those forms to do so. Computing the amount is another story all together. The bulk of the fed ES payment will be for your self-employment taxes (social security and medicare), roughly 15% of those earnings. Federal and state income tax amounts would be based on your total expected income, and at that only the taxable amounts (after consideration for "business" deductions, standard deductions and personal exemptions). While you could work through the computations yourself, and there should be worksheets with the ES forms, it might be better to consult with a tax professional (maybe after the 15th). Your federal 1040ES payment is going to be the combined payment of SE tax and income tax.

Another thing, does IL have any city/county tax reporting? Some locatalities impose a tax on earnings, so be aware of that.

"Required" is a relative term. Estimates are just that - estimates, and by the time the year is out, you may be overpaying or underpaying the actual tax liability.

There is no penalty for overpaying, just the lost use of your money (free loan to government). The "penalty" for underpaying is really just a loan interest charge, at an annual rate of 3% (currently), applied only to the months since each of the minimum estimated payments was due (in other words, less than a full year of interest). The state underpayment interest charge is probably similar to federal.

More than a few taxpayers don't mind paying the interest charge in exchange for completely avoiding the work of creating and implementing the eight "quarterly" estimated payments.

Proviso - as long as you can manage your cash flow to have any balance due available by the return filing deadline... if you can't save your money, then quarterlies are a good idea, a sort of enforced savings plan.

There are other exceptions. If you owed no tax for 2012, you don't have to make any estimated payments in 2013:

I don't know what the Illinois rules are; you might have to pay estimates there.

Dummies",

Thank you for clarification. If I wait until after the 15th to file the ES will I not be in violation as the first payment is due on April