I wasn't sure my wife and I even needed estimated tax tax installments for 2007 because the income without withholding that my wife earns is sort of hit or miss as a consultant. However she has been working pretty steadily 3 days a week; I think to be safe I should send a quarterly payment. Is the April date when the tax is due hard and fast? Is there a penalty for sending it in May?
In your case the penalty would be calculated as interest from 4/15/2007 to the earlier of 4/15/2008 or the date paid. So yes, go ahead and send it in. An alternative, if you're subject to withholding, is to have some extra withheld from your pay. Since withholding is applied equally over the year when considering estimated tax requirements, that would eliminate the need to make estimated tax payments and avoid any penalty. Details are in IRS Publication 505.
-- Phil Marti Clarksburg, MD
Is there some reason why she can't have withholding taken out of her payroll check? That would be easier than fretting about estimated tax payments.
You can send in your payment in May. Whether you will be penalized or not depends on how much tax liability you have when you file next year, how much withholding you had on any W2 income and when her Schedule C income was earned. You can read all about it on Form 2210 and the instructions for it, including the method to calculate annualized income.
My wife does consulting work for the Md State Dept of Educ. They don't take withholding. She's an independent contractor. I do some substitute teaching and to compensate a little I take no exemptions and even increased my withholding. I even increased my withholding on our MD State Teacher's Pension so that's why I wasn't sure if enough withholding was going to cover the $ she makes from the MSDE. They only call her in at various times.
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