OT: Quarterly Taxes

[JustInTime]

Anyone have experience filing quarterly taxes? Looking for software recommendations or tips filing by myself, level of difficulty, etc. Is it worth using a tax service? If so, what are the costs?

[comet52]

Anyone have experience filing quarterly taxes? Looking for software recommendations or tips filing by myself, level of difficulty, etc. Is it worth using a tax service? If so, what are the costs?

I used to track everything I did in a spreadsheet and use it to estimate my quarterly payments.  Then file them manually with a 1040ES.  You don't have to be perfect- since you are estimating there is leeway. You just don't want to massively underpay because it can lead to penalties.

For eoy filing I used various programs but my tax situation was always relatively simple.  If yours is complicated or you hate doing taxes you could go with a pro, but either way, detailed record keeping is a must.

I tried various programs and settled on one called TaxAct.  Later I went to FreeTaxUSA which is kinda low end but it does handle 1099 employment.  Some of them don't or require a higher cost version to do it so if you go with software make sure it covers self employment.  Some of the programs can help you do quarterlies if you prefer that.  I liked doing my own tracking to see where I was at, but probably you could find tax software to do something similar, just depends on what level of it you'd have to buy.

The best deductions I got were mileage, hotels and per diem--do that for meals instead of actual- it's typically better unless you spend big for food and eliminates the hassle of saving and tracking restaurant receipts.  Independents can't use it for hotels, only meals.  Mileage and per diem are federal rates, hotels were actual cost.

This stuff applies because I did extensive overnight travel but even if you don't, track your business mileage because it's a good deductible at the federal rate.   And the FICA portion of self employment tax (the 15% sock to your nuts on every dollar earned) is only figured on your net not your gross so find every edge you can... legally that is .  Learning the tax rules for independents and your specific occupation can help in that regard.  Good luck!

[StickierBuns]

Good advice from comet above ^

[JustInTime]

@comet52 Gracias! Excellent info. Looks like I have a couple options to choose from.

[Bunsen82]

As a CPA its really not that difficult. You are only required to pay estimates based on your prior year tax due. If you are trying to estimate each quarterly estimate you can set up how to calculate your net income. For federal, you would have the full FICA tax of 15.3% up to around $176k of income, then which ever tax bracket you are in. Generally a 20% to 25% of net income is pretty standard way to do it unless you have a lot of income.

As to what to use it really comes down to the amount of entries. Excel is generally the best way to go for smaller businesses or farms with not a lot of deposits or expenses (less than 25 entries per a month). More than that tends to get more complicated. The most well known software is Quickbooks, they are trying to get everyone online at $60 to $70 a month. My advice is you can likely find an accounting firm to do your reconciliations for the same cost. Or you can do the free online softwares. There are 3-4 different options that then try to sell you services.

[JustInTime]

From what I can gather, I can deduct:

Mileage on trips.
Mileage to trips.
Mileage back home from trips.
Car registration.
Car washes.
Loan interest.
Phone bill.
Tax programs.
Snacks.
Meals.

Uber already provides mileage on trips so I’ll have to back into anything else. That won’t be difficult. Tracking it will be a pain but I can whip up an excel spreadsheet easy enough and track daily.

[comet52]

From what I can gather, I can deduct:

Mileage on trips.
Mileage to trips.
Mileage back home from trips.
Car registration.
Car washes.
Loan interest.
Phone bill.
Tax programs.
Snacks.
Meals.

Uber already provides mileage on trips so I’ll have to back into anything else. That won’t be difficult. Tracking it will be a pain but I can whip up an excel spreadsheet easy enough and track daily.

Snacks and meals are only deductible if you are away overnight on business or if they are purchased to be consumed in a business meeting.  Or if you buy complimentary snacks for your paying passengers because you are one super fellow .  A more detailed discussion is here: https://www.keepertatwitter.com/posts/ub...duct-meals

As for auto deductions, this is a must-read: https://www.irs.gov/taxtopics/tc510

[JustInTime]

Depreciation 
Sirius

[Bunsen82]

Depreciation 
Sirius

Just for clarification,  anytime you take an uber or taxi you would not calculate mileage on that.  That would be considered either a taxi expense  or contract labor expense.  Mileage expense on a vehicle basically covers the expenses of your vehicle including license, insurance, fuel and repairs.  You can discuss with your accountant on whether they would take depreciation on the vehicle or not or just the mileage expense.  

Categories of expenses -  accounting, advertising, bad debts, bank charges, contract labor, freight, dues and subscriptions, insurance (liability), interest on business loan or building, legal, office, mileage, postage, rent, repairs, supplies, telephone, travel,  meals at 50%, uniforms or clothing expense, wages for labor.   You would then have any small tools or equipment under $250 or $2500 if you take the de minimus election.   Then any larger pieces of equipment depreciated.  For you your computer, if you purchase a phone, if you don't have a dedicated line part of your phone bill.  You would need to consider if you qualify for a home office deduction,  if not if you use part of the home but don't qualify for home office,  utilizing a % of utilities, real estate taxes,  home mortgage, home insurance could be considered.

[ArizonaViking]

I'm glad I just sit in my office...