Fema Employment
Estimated Tax?
My mom has a small business or is self employed and since her 2 clients dont take out taxes when they pay her she set up something where she pays $250.00 to federal quarterly and $80.00 to state quarterly (Ohio if that matters at all). And on the 1040 form the software I am using has put on line 27 (One-half of self employment tax.) $281.00 then on like 64 (Federal income tax withheld from forms w-2 and 1099) $425.00 then on line 65 (2007 estimated tax payments and amount applied from 2006 return) $1,000.00 I wanted to make sure that this sounded right to someone because I have no clue.
Public Comments
- I think you got it right... assuming she does not have a carryover of overpayment from 2006.
- Yup - You don't have to pay income tax on half of your SE tax, so you get to deduct half on line 27 as part of your Adjusted Gross Income Calculation. Then you deduct the deduction and the exemption(s) and figure your taxable income. Then you use your taxable income to figure your income tax. Then on line 58 you add the SE to the income tax to figure your total tax liability. Then you subtract your withholding on line 64, estimated payments on line 65 and any other credits or payments. If you paid in more than your total tax, you get a refund. If you paid in less, then you end up owing...
- Casie, I know you are trying to help your mom and save her some money, but from your questions it's getting pretty clear that her taxes are beyond what you are able to do. Doing taxes for a small business can be tricky, and isn't a job for someone not familiar with the tax code. But to answer your questions: If she paid in $250 each quarter for federal, then yes, $1000 on line 65 would be right. The $281 on line 27 would have come from the calculation on schedule SE, and should be half of the amount on the bottom of schedule SE. As for line 64, if she had a W-2 job and had $425 withheld, or had $425 withheld from something else like a pension, then that's correct too.
