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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: Tax
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Experience:  10 years experience
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Second opinion] i have a questions for you! my husband and I

Customer Question

Second opinion] HI, i have a questions for you! my husband and I have our own business, and we want to pay estimated taxes, we are a sole propietor llc, we want to send estimated taxes during the year so we dont end up with a big bill at the end of the year! however my husband own back taxes still for old years! we are a afraid that the IRS will take the estimated taxes for this year to pay his back taxes he owms, is that possible? plus since we are late for the fist payment due in april how much interes or penalty can i calculated if i send the payment now?JA: The expert will know how to help. Is there anything else the expert should be aware of?Customer: are you there?JA: No. I'm the expert's Assistant.Customer: ah ok, so how long should i wait for my answer?JA: Our average wait time is under 20 minutes. Sometimes it takes just a minute. More complicated questions that need more research might take an hour or two. I'd be happy to chat with you while you wait. The stories I've heard working here...Customer: now do i have to pay state estimated taxes as well? we are located in VA
Submitted: 3 months ago.
Category: Tax
Expert:  emc011075 replied 3 months ago.

Hi. My name is ***** ***** I will be happy to help you.

A LLC owned by husband and wife CANNOT be a disregarded entity. You cannot file as 2 solo proprietorship (joint venture election) . You have to file as partnership. Partnership is a flow through entity so eventually the tax liability will be calculated on your personal return. To make sure the payment is correctly assigned to your current year as estimate use the proper voucher and also specify it on your check as such: 2nd Qtr 2017 1040ES for instance. The same would apply to your state estimates. I would not calculate any interest or penalties, let the IRS to "figure it out" for you.

Expert:  emc011075 replied 3 months ago.

I see you read my respond. Do you have any questions? Is there anything else I can help you with today?

Customer: replied 3 months ago.
In order to calculate my estimated taxes for this year I have to do 1040es I know that! Now I am confused when I try to fill it out, the form start with AGI for this year!, I am not sure what exactly that number is?, it is the net profit of the business itself?, or it is my income (outside of business) i received w2 plus the net profit of business all together? Since we do a join return I don't know how to start the form! Ex: my form w2 total income outside the business is $40000, I am calculated $50000 profit from business remember this is not the total gross is the net income from business itself the AGI IS 40000+50000=90000? Or the AGI is the net income of our business only? Thanks again!
Expert:  emc011075 replied 3 months ago.

AGI is adjusted gross income - total income reduced by certain adjustments. When you look at 1040 the adjustments are on lines 23 through 35. You can use the worksheet but most people don't use it. The easier way is to determine your tax bracket % (income tax) and add 15.3% (self-employment tax). Apply to percentage to your estimated net profit for the quarter to calculate your estimates. For instance if you are in 15% tax bracket you should estimate about 30% for federal taxes.

Expert:  emc011075 replied 3 months ago.

Does it make sense? If you are going to file a joint return it does not matter who makes the estimates. A partnership itself does not pay any taxes so the profit will be reported on your individual returns via K1.