quarterly taxes

[Crazynuff]

Hi Frank,

I have a question about the quarterly tax payments. We began our
business in the beginning of the third quarter of 2004. We had a
refund due to expenses of the business startup, etc...
Now, for the tax season of 2005, we are unsure if we need to begin
filing our taxes for the business on a quarterly basis.
I have heard that if you did not have a tax liability for the previous
year that you do not have to file quarterly.
Could you help us with this?
Thanks in advance.

 

[larrybadger]

>I understand about the tax brackets, as I have paid more
>than my fair share through the years. You write $14,300 -
>$58,100 and $1,430+ at the 15% bracket. What is the "and
>$1,430+" ?

Prof,

If I am not mistaken, that would be the starting point for your taxes, in addition to the tax owed at your tax bracket level.

So if your taxable income is $56,000 your tax liability would be:
$1430 + (15% of income over $14,300 = $41,700) x 15% = $6255
the $14,300 figure and others are from IRS table.
$1430 + $6255 = $7685.00 tax due

http://www.irs.gov/pub/irs-pdf/f1040es.pdf

Also note: Your state will also want quarterly returns filed, and they may [I'm not sure] not be as flexible for the first full year after an initial return. They *may* want you to file quarterly this year also even if you started your business in 2004.


Larry Badger
Plainwell, Michigan
Future expediting company driver
Stay-at-home Dad, 2000-
25 years self-employed in landscaping business

 

[Fkatz]

NO, you do not have to pay quarterly taxes this year unless you feel that you would want to.

if you take the amount of income that you did make since you started and figure each quarter the same for the entire year, it will give you an approximate gross income for this year. you can average your taxes by figuring from
$14,300-to $ 58,100 and $1,430+ At the 15% bracket
$58,100-to $117,250 and $8,000+ at the 25% bracket
based on the total gross figures. not the net

any other question please do not hesiate to ask


Frank

 

[theoldprof]

Frank,

I understand about the tax brackets, as I have paid more than my fair share through the years. You write $14,300 - $58,100 and $1,430+ at the 15% bracket. What is the "and $1,430+" ?
Thanks. :+ :+

 

[Fkatz]

Hi Larry,

Your Answer to OLDPROF is correct, I just left off the exact explaination which I did not realize.
I had a client walk in to the office to do there tax return. and had to finish up fast didnt edit the format.
I really would wait on the estimated tax payments until you have an idea of what your Net income after expenses will be for at least this first quarter of 2005 before you make a payment.
you have to remember if your in a cargo van the mileage and your per diem is also considerd in the net figure.

Example;

Grossed lets say for the quarter approx $1500 /wk. =13x1500= $19,500
your were out for the full 90 days at 41per = $ 3690 X70% (-2583.)
and you put on 3000 miles per wk x 13 weeks 39000 x 40 = (-15,600)

NO ESTIMATED TAXES DUE USINING MILEAGE IN A CARGO VAN

STRAIGHT TRUCK SAME SENARIO
GROSS $19,500.00
PER DIEM $ -2583.00
FUEL @ 2.00 PER GAL AND 39000 MILES AT 10MPG
= 3900 GALLONS $ -7800.00
PLUS OTHER EXPENSES.
STANDARD DEDUCTION WOULD BE IF MARRIED $9800.00
DEPENDENT DEDUCTION AT $3100 EACH WOULD EQUAL NO ESTIMATED TAX DUE EITHR FEDERAL OR STATE.

Any Questions

Frank