Whew! Finally Done With Income Taxes

Mr. A and I spent a couple of hours this morning going through his mileage records and got those accounted for on my 2008 mileage spreadsheet.  That enabled me to finish up our income taxes.

We’ll owe $137 to the Federal government, but we’ll be getting just over $250 back from the state.

I also went through the planning feature that TaxCut offers to see what we need to pay for estimated taxes.  It’s really difficult to know how much Mr. A will make and what kinds of deductions he’ll be able to take, but I put in some estimates.  High on the income, low on the deductions.  We will need to pay $900 each quarter, based on the business Mr. A has done this first quarter, and figuring the amounts I’m having taken from my check.  That’s pretty hefty, and I’ll definitely be watching closely.

I need to learn more about estimated income taxes. For example, let’s say Mr. A’s business slows way down for the next quarter.  Do I recalculate what will be owed, and then make a smaller estimated tax dependent on the new numbers?  If I stayed with the higher amount we’d end up with an overpayment.

Does anyone know? Please leave me a comment if you have any knowledge on this.

Yours Truly,

Mrs. Accountability

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4 thoughts on “Whew! Finally Done With Income Taxes

  1. YOU NEED AN ACCOUNTANT. If you’re running a small business at the level that your estimated payments actually matter to your finances, you need an accountant.

    For what it’s worth, I never worry about overpayment in the context of small business. No big deal. It’s underpayment where they scrutinize every line and charge you a pile of charges.

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    Mrs. Accountability Reply:

    I’ve been thinking that would be nice to find someone who could at least look over my shoulder (on occasion) and let me know if I’m doing things right. Thanks for the suggestion… another hurdle to cross. How does one go about finding an accountant? Sigh.

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  2. Mrs. Accountability,

    To do SE taxes, you don’t need an accountant. Though you may want to go in to one at least once, to get a better feel for all the expenses you might be missing. (Also accomplishable by reading carefully the IRS documents about it.)

    If you want to avoid overpayment, here’s a simple way to figure things.

    You know that SE tax form you used at the end of the year to figure tax? Use that on your quarterlies. Essentially it’s your net profit (minus obvious expenses, some, like car, you may want to leave til the end of the year unless you’re going to simply take the estimated mileage) times 92.35% (0.9235) and then that amount times 15.3% (0.153). That much is your SE for the quarter.

    It really only gets complicated if his income is low enough one quarter to affect your tax bracket. That’s the biggie: Don’t forget to pay SE *plus* regular taxes. So if you’re at 25%, you’ll end up paying 40.3% in the end. Fun, eh?

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    Mrs. Accountability Reply:

    LOL!! I will have to print this out and study on it to understand what you are saying here, ’cause it isn’t making any sense to me right now. I think you are saying to go with the SE tax we paid last year and pay depending on that figure? I also think SE (darn that TurboTax doing all the figuring for me) is paid on net income from the business. We had about $10K in start up costs/deductions for the businesses that we almost for sure won’t have next year, so Mr. A had a fairly low net ($16K), and so not much in SE was due. Anyway, thanks for your food for thought. I really appreciate it, and thank you for visiting and commenting!

    [Reply]

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