Anyone know a little about taxes?

**misstina87** · 10-27-2010, 11:19 AM

For those who are self-employed or make extra money on the side, I have a question about taxes. I know that in order to avoid paying a penalty when you do your yearly taxes, you have to pay estimated tax payments 4 times a year. In order to determine this, you have to take the amount of taxes you paid last year and divide it by 4.

For those who pay estimated tax, does it HAVE to be equal amounts? I sell on ebay and I could make $1000 one month and $2000 the next month. Can I just take a percentage (like 20%) out of each month's profit and just pay that amount to the government? I have read that it SHOULD be equal amounts but I didn't know if it was a requirement. And if I do make "uneven" payments, do I get charged a penalty?

**savvy_sniper** · 10-27-2010, 02:23 PM

I sell online and I make $1,000-$3000 a month. BUT that is before expenses, etc. Plus I am married and my husband has a regular job that withholds taxes. We usually end up getting a refund; so I don't have to pay quarterly taxes.

**Pianolady** · 10-28-2010, 03:19 PM

I'm definitely not a tax professional, but I think as long as the total amount gets paid by the end of the year, you'll be ok. I've done it that way without penalty, and I've been self employed since 1987. It would be a good thing to ask an accountant to be sure.

It's easy not to get it all sent in if you don't stick to the schedule though. I think the penalty is 5% on the amount not paid, and they start the penalty from the time it was due, I think? (the four equal payments). Again, check with an accountant to be sure I'm right. But if you have to borrow money to avoid the penalty, it may be cheaper just to pay the penalty.