AboutMike Wellman Expertise I was a former Manager with Price Waterhouse, now PricewaterhouseCoopers, the largest accounting firm in the world. I have had clients in almost every industry and of every size. I will only answer questions dealing with IRS problems such as delinquent tax returns, Offers in Compromise (Tax Settlement), IRS collection matters including installment agreements, liens, levies, seizures, audits, appeals, innocent spouse claims and injured spouse claims. All others will be referred to the question pool.
Experience Over 25 years experience in taxation specializing in IRS collections, examinations and appeals.
Publications New York Times, Wall Street Journal, You Money Magazine
Education/Credentials BBA, Baylor University.
Awards and Honors My website http://www.IRSOS.com won the Knowledgeweb award for educational excellence for content.
Expert: Mike Wellman Date: 9/4/2007 Subject: Paying quarterly contractor taxes
Question QUESTION: I am a contractor and thus have to use 1099-R forms for filling out my taxes. I have recently been told that I also have to pay taxes throughout the year or I will be penalized. How do I do this? I don't feel like getting penalized, but can't figure out where to go, who to pay, what forms I need, and if I can just pay online with billpay or something of the sort.
Thanks!
Jason
ANSWER: Since you have no withholding you will need to to make estimated tax payments using the 1040-ES forms. The payments are due four times a year. The idea is that you pay one fourth of what you expect to owe each quarter. The payments are due 04/15, 06/15, 09/15 and 01/15. The forms are available at http://www.IRS.gov. There is also information about payment options which include credit cards and electronic payments.
---------- FOLLOW-UP ----------
QUESTION: Do you have any idea what the fees are like if I don't make these quarterly payments?
Answer There is a 10% penalty on the amount underpaid. As long as you have paid in at least 100% of last year's taxes or 90% of what you will owe for the current year by 01/15, no penalty will apply.
If you file your taxes but are unable to pay the total due at that time, you will incur another penalty for failure to pay, which is 2 1/2% per month. It is capped at 25% of the amount underpaid.
