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Do you guys pay quarterly taxes on your earnings?

Discussion in 'Making Money' started by C-Rod3, Aug 25, 2016.

  1. C-Rod3

    C-Rod3 Registered Member

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    Now that I'm starting to generate more than just pocket change online,

    I have heard that quarterly taxes are mandatory if you owe more than $1000 in taxes (USA)...

    Do you guys usually just file at the end of the year or are us self-employed individuals required to actually file estimated taxes? If so, what service(s) do you use?

    Thanks in advance.
     
  2. Purush

    Purush Jr. VIP Jr. VIP

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    I am not in US , no worries.
     
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  3. blackpenny

    blackpenny Junior Member

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    I would like to know this too. Bumped.
     
  4. Shenyuh

    Shenyuh Newbie

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    I'm interested in know this as well.
     
  5. BassTrackerBoats

    BassTrackerBoats Super Moderator Staff Member Moderator Jr. VIP

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    Self employed people in the US are supposed to pay quarterly taxes or they will be penalized when they file their taxes.

    It is really very easy to estimate your taxes and get the ball rolling.

    What would serve you best is to get a local bookkeeper to set that up for you (probably cost you less than 100.00 in most areas) and treat your IM enterprise(s) as a business.

    @C-Rod3 - I'm impressed with your maturity and wanting to do things the right way.
     
  6. judaculla

    judaculla Jr. VIP Jr. VIP

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    Legally speaking (I'm not a lawyer so semi-legally speaking), you should probably file taxes on your IM income.

    That being said, I know plenty of people in the US that have 20K plus of odd 'business' type income every year that don't even file taxes on it. None of them have run into any issues yet. I would never recommend such practice, but hope that may help ease your worries if your waiting for a financially-comfortable time to set up a business.

    If you are in the US, I was advised by several attorney's which I consulted when setting up my businesses that s-elective corporations are the way to go these days for individuals. It's a 'pass through' entity that allows any profit from the business to be declared on your personal taxes, but it's taxed as capital gains so you only pay ~15% rather than the full~34% of income tax. If you're paying yourself a salary, that'd still be taxed at the full rate. You should def. consult an accountant when you get that level of concern.

    In some cases LLC entities are still fine, but usually only in the circumstances where income is qualified as capital gains, such as patents, non-dividend stock income (when sold), and maybe some real-estate type investments.

    TL;DR

    Ultimately, if you're making enough money to fret about reporting the income—it's probably time to set up some legal entity.
     
  7. C-Rod3

    C-Rod3 Registered Member

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    Fair enough.

    I stumbled across a reputable service called H&R Block that allowed me to chat with a representative who was very helpful with my complicated questions. I know exactly how it works now.

    I explained to her that I am earning income online, and she confirmed this is considered self-employed.

    Basically, if you don't make more than approx. $6300 PER YEAR, you won't need to pay quarterly. You will still need to file a Schedule C in April reporting your annual income, but no estimated taxes.

    Assuming you do make more than this amount ($6300), you basically have to make an estimate of 1/4 of your tax each quarterly tax season. For example, if you make $10,000 in IM and owe $2000 TOTAL in taxes on that income, you'd pay $500 each quarterly tax month (By March, By June, By September, and by December). Then, when april tax season came around, if you got your estimates right, you'd be paying close to nothing. You may even get a refund if you overpayed.

    Another thing I mentioned was expenses. Obviously running a website, launching an advertising campaign, basically ANY investments you make are considered legal expenses and you DON'T NEED TO PAY TAXES ON THEM. You simply report them when filling your taxes. You can have your bank statements as proof, but chances are, you won't need them unless the IRS actually investigates you and asks for proof. So basically if you make $10,000 dollars online, and have $5,000 in expenses, you wouldn't have to pay quarterly. All that matters is net income.

    It is extremely important to pay taxes, because if you are making a small amount of money now and bypassing taxes, by the time you make big money, you will have racked up a plethora of penalties resulting in major fines. Even jail time in extreme scenarios. The IRS is nothing to mess with.

    Luckily for us, there are many services that allow you to pay taxes online, but for quarterly taxes unfortunately, you need to either mail them or pay directly on the IRS website. Come tax season, you simply report what you paid in quarterly taxes, and your done. You can file your annual final taxes online and that is actually a piece of cake.
     
  8. Sythix

    Sythix Senior Member

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    How are you earning money these days C-Rod?
     
  9. davids355

    davids355 Jr. VIP Jr. VIP

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    Yes, best to pay taxes. If you are earning good money and worried about paying it all alway just get a good accountant and that will help alot.
     
  10. ArranWood

    ArranWood Registered Member

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    Not a direct response to the OP’s questions, however I believe this to be on topic and helpful too.

    If you are in the UK and are starting to consider registering at least some percentage of your online income, then set up a LTD rather than self-employed. Also retain your receipts from as early as possible, as these can be used in Year 1 of your LTD business as setup costs up to 6 months prior to setting up your LTD.

    Luckily in the UK you do not have to consider ¼ payments or anything like that.

    Additionally if you believe you are going to reach the point where you need to charge/pay VAT and it’s too much hassle based on products/services you offer, then simply start a new LTD and divide your business accordingly.

    At one time I was either director/majority shareholder for 12 LTD companies and at first that may seem very daunting, in practice it’s far easier. :)

    Just my opinions anyway

    Regards

    Arran
     
  11. C-Rod3

    C-Rod3 Registered Member

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    I'm a well reputed seller on Fiverr. I'm able to generate $500 a month, but I actually offer genuine services that require time and creativity. Not exactly the most efficient way to make income online.

    I've earned $2 through Amazon Assosiates, and $0.86 through Adsense both on my one micro niche site.

    I've had 1 sale on my service site - $200. Again, all legitimate services

    I know those numbers are pretty pathetic compared to what some people are earning, but I've accomplished everything I set out to do. I have high hopes for the future.
     
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