Hi & thanks for using our service. I'll do my best to give you a complete & accurate answer. Please ask me to clarify anything you don't understand.
Operating as an independent contractor is the most straight-forward & simplest income tax wise.
Your income tax reporting will be preparing a "Schedule C" to be included with your annual Form 1040 filing to report your independent contractor earnings - (self-employment income); you will also need to prepare a Schedule SE to compute your self-employment tax (social security tax).
What type of work are you doing?
I am a print and web designer for a fashion brand
Do you use a tax preparer or CPA now?
We used a tax preparere for our 2010 taxes, yes
You might seriously consider a CPA to make sure you take advantage of everything you can as a self-employed independent contractor.
Thank you, XXXXX XXXXX look into that
There are several ways to meet your estimated payment requirements. The general rule is that you need to estimate your self-employment income & compute your estimated income taxes on a quarterly basis, with estimated payments due on 4/15, 6/15, 9/15 & 1/15 of the following year (which is the 4th estimated payment for the preceding year).
Great to know this, so my next filing date would be 9/15
I missed the 6/15 one although Ive been ICing since April
Making estimated payments on self-employment income isn't optional; if you don't make them or if you don't qualify for an exemption for a particular quarter; you will pay a penalty (computed like interest) for the amount that you should have made until you actually make the payment either late or with you tax return.
So I'm probably penalized as of right now being that I've been ICing since April?
Yes it would be 9/15, BUT you may be ok with respect to 6/15.
I would suggest that you see a CPA now so he/she can advise you as to what to do re your estimated payments, get you into his tax preparation system for 2011; give you some guidance as to what expenses you might be able to deduct against your gross self-employment income & generally give you some advice re possible retirement plan contributions/deductions, etc.
Ok great, thank you for your help. One more question if you don't mind...
In your expert opinion, are there tax benefits to operating through an LLC or S-Corp instead of being an IC? My husband is currently unemployed and I want to make sure I'm providing the best way I can
All that is really beyond the scope of what we can do in this format; all we can really do is identify what you need to address; give you some general guidelines & point you in the right direction; when you are self-employed, you really need to have an ongoing relationship with a tax adviser; A CPA can do it all for you.