Tax experts(estimated taxes 1040-ES)

[Codewiz]

I got married last year. My wife and I didn't do a great job of handling the taxes. We owed a little over $1000. We knew it was coming so it wasn't a problem.

The problem came in that I had been living single and had been able pretty much guess within about $300-400 what my taxes would be. Basically I never want a refund.

Anyways, we went ahead and did our return for this year. We had the extra money and it wasn't an issue.

Here is my question, now I am being asked to pay estimated taxes for the year 2005. We have corrected our withholdings so we will at most have to pay $300-400 next tax season.

As of right now turbotax said I need to pay $1000 over 4 payments this year. What is the reason for this? My wife and I both work and have money come out of our paychecks. We aren't self-employed.

Most of the information I can find for this is based on self employed people.

 

[FP]

Bump because I am in the exact same situation.

I was told by a CPA I know that there is just a small penalty (like $70) if you are not self-employed and required to pay estimated taxes but don't.

I am aware that if you are self-employed and skip estimated taxes then you are charged 6-8% on the money throughout the year.

Is this the same for individuals who are not self-employed?

The CPA wasn't a tax accountant so I wanted to get a second ATOT opinion. 😉

 

[EagleKeeper]

If you reported any income last year via a 1099 then tax S/W will treat this as permanent/on-going self-employment income and recommend appropriate payments.

Over a sum of 4 exemptions (example 2 + 2), then you need to either pay some estimates and/or put $$ aside and pay prior to the end of the year to ensure that you are not hit with under-withholding penalty.

Under-witholding can occur when multiple incomes show up and/or you have adjusted your witholding to not pay your "fair" share during the year according to Uncle.


If you are not having any outside income that is not being tax through an employer and your witholding summation (between you and your wife) is 4 or less exemptions, then do not worry about it.

 

[olds]

See sig

 

[FP]

Originally posted by: EagleKeeper
If you reported any income last year via a 1099 then tax S/W will treat this as permanent/on-going self-employment income and recommend appropriate payments.

Over a sum of 4 exemptions (example 2 + 2), then you need to either pay some estimates and/or put $$ aside and pay prior to the end of the year to ensure that you are not hit with under-withholding penalty.

Under-witholding can occur when multiple incomes show up and/or you have adjusted your witholding to not pay your "fair" share during the year according to Uncle.


If you are not having any outside income that is not being tax through an employer and your witholding summation (between you and your wife) is 4 or less exemptions, then do not worry about it.

So even though TurboTax told me I have to pay estimated tax payments this year as long as my wife and I claim 4 or less withholdings and both of us have taxes taken out of our paychecks we won't get dinged at the end of the year?

 

[CPA]

The tax software make estimates of quarterly deposits based on several things. One of which, Eaglekeeper already outlined. The other is if it believes that based on it's calculations you will not have withheld 90% of your current year taxes by year end. It does this by looking at your prior year's tax situation, making adjustments according to estimated exemptions, deductions and income.

To really understand, the first thing you should look at is 1099 income, if you had any. Then check to see if Turbotax asked you any questions about what you expect to earn next year.