I had a question about paying estimated taxes. Here is my situation, basically, I expect to make an extra $5000-10,000 this year in self employment income, on top of my regular salaried income from my job. I'd rather not have to bother filing estimated taxes. My understanding of estimated taxes and the safe harbour provision is that if I can cover 90% of my taxes through my salary, I should be fine and not have to pay estimated taxes (or a penalty for not paying them). I will have a deduction in 2007 of roughly $16,000-17,000 for my mortgage interest. That is my biggest deduction. So, is the following scenario safe? I'll use rounded numbers to make things easy. Income: $50,000 (normal taxes withheld) Self employment income: $10,000 Total income: $60,000 Deduction: $15,000 (house interest)
So given this scenario, as long as my extra income doesn't go above my deductions, I should be fine, right? Taking into account that I'll pay the extra self employment taxes too, so I can't quite make a one for one match between my deductions and my extra income. Make sense?
-- Mike