estimated taxes in US: how do you guys do it???

[erova]

hi everyone,


quick question to get some feedback from people in a similar situation:

how do you decide how much/if you pay your estimated quarterly taxes?

simply put, I never really know how much jobs are going to go for, nor do i know when i'll get paid, nor do i know when a job comes along--

perfect example: back in may a design shop finds my site on the web, and we ink a deal for about 7 grand of business (obvioulsy an amount they'll turn in a 1099 for...). well, the job was supposed to be done and paid for by august, and just now the site is getting around to launch. i'm not worried about the loot--what i'm concerned about is that in my situation, i never saw that 7 grand coming before May--if I paid quarterly taxes in April the amount would have been different than it would be after that for subsequent installments after that substantial increase--but now here we are (almost) in December and I may not even receive a final check until the new year--how on earth am I supposed to calculate such a situation???


seems probably enough that this has happend to a couple of you guys on here--care to share?

thanks!
chris

[pheck]

If you make more this year than you made the year previous, you don't have to increase your estimated tax payments for this year. Said another way, you aren't penalized for making more this year than you made last year. If you read the instructions on the estimated tax instructions, you'll see that the estimated tax is calculated based on last year's income. When it comes to filing for taxes at the end of the year, you will owe more to the government this year, but you won't be penalized for not paying enough estimated taxes, as long as you paid at least the same amount in estimated taxes as you paid the previous year. The place where you can get yourself into trouble is if you don't think you're going to make as much this year as you did last year, and decide to pay less estimated taxes each quarter, but then you end up making as much or more this year. So I would recommend just going by your last year's income in calculating your estimated tax, and you shouldn't have a problem. Of course consult your tax laywer for verification of this but that is my understanding. I know there are exceptions to this as when you win the lottery or inherit a large sum of money. In those cases I think it is usually the case that you pay a percentage of those incomes immediately to the government.