Serving Jackson, Mississippi, residents since 2015, Sunbelt Tax Service offers comprehensive tax preparation services at reasonable, fixed-price rates. Sunbelt Tax Service specializes in all types of filing situations, including annual and quarterly tax returns.
One of the major differences between employees and independent contractors is how they are taxed. Employees’ taxes are withheld from their paychecks. Independent contractors, on the other hand, must withhold their own taxes. For this reason, the IRS requires recipients of 1099s worth more than $400 to pay estimated taxes every quarter.
Estimated tax payments include a 15.3 percent self-employment tax and regular income tax. For most independent contractors, between 30 to 35 percent of gross income should be allocated to quarterly tax payments. When the contractor files an annual tax return, the IRS will apply previously paid taxes to the final tax bill. Any overpayments will be refunded. If taxes are owed, there will be no penalties if the estimated payments equate to at least 90 percent of taxes owed the previous year.
One of the major differences between employees and independent contractors is how they are taxed. Employees’ taxes are withheld from their paychecks. Independent contractors, on the other hand, must withhold their own taxes. For this reason, the IRS requires recipients of 1099s worth more than $400 to pay estimated taxes every quarter.
Estimated tax payments include a 15.3 percent self-employment tax and regular income tax. For most independent contractors, between 30 to 35 percent of gross income should be allocated to quarterly tax payments. When the contractor files an annual tax return, the IRS will apply previously paid taxes to the final tax bill. Any overpayments will be refunded. If taxes are owed, there will be no penalties if the estimated payments equate to at least 90 percent of taxes owed the previous year.
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