When making estimated tax payments to the IRS, do I need to include an amount to cover self-employment taxes?
Richard M asked:
I am a self-employed consultant as of this year, so I am responsible for both income and self-employment taxes. If I cover all income taxes due with estimated taxes during the year, but do not include funds to cover SE taxes until I file in 2009, will it appear on my filing next April that I have under-paid, incurring penalties and interest?
Gabriel
I am a self-employed consultant as of this year, so I am responsible for both income and self-employment taxes. If I cover all income taxes due with estimated taxes during the year, but do not include funds to cover SE taxes until I file in 2009, will it appear on my filing next April that I have under-paid, incurring penalties and interest?
Gabriel
Yes. Self employment taxes are supposed to be included in your quarterly payments.
Your estimated payments are supposed to include all taxes due including Self Employment taxes.
If you don’t, you could have penalties for underpayment of estimated tax payments.
Definately include an amount to cover the SE tax.