Do you file your taxes quarterly like a good little citizen, or do you just do it yearly? I've heard a couple people say that while the govt. says you have to, you really don't. Anyone have any real experience with this matter? (opinions welcome, but I'm looking for personal experience)
Thanks in advance,
Lala
Question for the Self-Employed
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Lalanae
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Question for the Self-Employed
Lalanae
Burundi High Chancellor for Tourism, Sodomy and Pie
Unofficial Canadian, Forbidden Lover of Pie, Jesus-Hatin'' Sodomite, President of KFC (Kyoukan Fan Club), hawt, perververted, intellectual submissive with E.S.P (Extra Sexual Persuasion)
Burundi High Chancellor for Tourism, Sodomy and Pie
Unofficial Canadian, Forbidden Lover of Pie, Jesus-Hatin'' Sodomite, President of KFC (Kyoukan Fan Club), hawt, perververted, intellectual submissive with E.S.P (Extra Sexual Persuasion)
My wife did some home-work where she had to deal with this a little, but she made so little it didn't matter.
My understanding is that if you owe too much when done for the year, they will penalize you. Doing it quarterly will prevent this penalty from hitting you.
So it depends on if you have other income that is already taxed or not. If you do and will break even or still get a refund, then doing it anually won't hurt you. If it is your only income, then the chances of you getting penalized for doing a yearly return vs. quartlerlies are pretty good.
My understanding is that if you owe too much when done for the year, they will penalize you. Doing it quarterly will prevent this penalty from hitting you.
So it depends on if you have other income that is already taxed or not. If you do and will break even or still get a refund, then doing it anually won't hurt you. If it is your only income, then the chances of you getting penalized for doing a yearly return vs. quartlerlies are pretty good.
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Melrin_Specclaster
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Do it quarterly just to avoid the lump at the end, although it will take more time, it will be easier each time. I had an accountant do mine but I did do it every quarter. Also, I suggest you find an accountant that will tell you how to cut corners so you don't have to pay as much taxes. I paid my rent, bought my computer, and other things out of my business instead of paying myself and then paying them. There are OMGIAMRETARDEDCAUSEALOTISTWOWORDS of loopholes, but some accountants wont stray into the grey area.
Coercer
The issue is two parts really:
1. Tax law requires you to make estimated payments quarterly. There is a formula which (if memory serves) is largely based on your last tax year's earnings, unless you can prove substantially less income in the current tax year.
2. The estimated quarterly payments must be within a certain % of the annualized income tax / 4.
As I understood it, non-compliance with either of the above can cause penalties. I spent three years self employed recently, and this is my recollection of my tax preparer's explaination, so may not be wholly accurate, but should be close.
From my own personal experience, it really doesn't serve your own purpose to underestimate on your quarterlies, as in April, you have:
A) Quarterly estimates due for the current tax year,
plus
B) Any underpayments from the previous tax year.
1. Tax law requires you to make estimated payments quarterly. There is a formula which (if memory serves) is largely based on your last tax year's earnings, unless you can prove substantially less income in the current tax year.
2. The estimated quarterly payments must be within a certain % of the annualized income tax / 4.
As I understood it, non-compliance with either of the above can cause penalties. I spent three years self employed recently, and this is my recollection of my tax preparer's explaination, so may not be wholly accurate, but should be close.
From my own personal experience, it really doesn't serve your own purpose to underestimate on your quarterlies, as in April, you have:
A) Quarterly estimates due for the current tax year,
plus
B) Any underpayments from the previous tax year.
~Venti