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Tax.appeal.168
Tax.appeal.168, Tax Accountant
Category: Tax
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Experience:  3+ decades of varied tax industry exp. Tax Biz owner
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My wife has a job now that does not take taxes out of her income.

Customer Question

My wife has a job now that does not take taxes out of her income. She says that they will give her a 1099 at the end of the year stating her total earnings. But I am afraid we have quarterly taxes due and that we will be penalized. What do I do?
Submitted: 2 years ago.
Category: Tax
Expert:  Tax.appeal.168 replied 2 years ago.
Welcome. Thank you for choosing us to assist you. My name is ***** ***** my goal is to help make your life, a little... less taxing.
Receiving a 1099-Misc is not unusual. However, you wife wants to make sure that she is really considered an independent contractor, rather than an employee. Some companies try to get around paying payroll taxes by mis-classifying employees as independent contractors. For more information regarding independent contractors vs. employees, you can refer to the following IRS webpage;
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Independent-Contractor-Self-Employed-or-Employee
Following is how the payment of estimated taxes work;
If you are expecting to owe $1,000 or more in taxes then a taxpayer should make estimated tax payments. If the taxpayer does not expect to owe that amount, they are not required to make estimated tax payments, but they can. If the estimated tax payments made exceed any tax that is due, that will be refunded to you. Refer to the following IRS webpage for more detailed information relating to estimated taxes.
Who Must Pay Estimated Tax
If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return.
If you are filing as a corporation you generally have to make estimated tax payments for your corporation if you expect it to owe tax of $500 or more when you file its return.
If you had a tax liability for the prior year, you may have to pay estimated tax for the current year. See the worksheet in Form 1040-ES (PDF) for more details on who must pay estimated tax.
REFERENCE SOURCE:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Estimated-Taxes
Let me know if you require further assistance with this matter.