How to deal with 1090s and paying taxes quarterly?

This may sound wimpy, but I would hire a tax accountant to get a system set up for you.
It will cost something, but it’s a business expense and you can deduct it. Then next year
you can do it yourself. Good for you to get this thing going.

You need to get that taken care of NOW. You’re already two full quarters behind—if you wait until April to file, you’ll owe huge penalties.

Susan is sooo correct: T A X A C C O U N T A N T stat!

I know people who have done this, and one was only fined $100 and the other wasn’t fined at all… So, I am not too nervous about the penalties.

My first year freelancing, I didn’t pay quarterlies. I did owe a significant chunk to the government the following April (as well as my quarterly for the new year), but I don’t recall there being penalties. Definitely get an accountant.

Does anyone have any advice if I can’t afford an accountant?

No, you really don’t want to get behind with this. Failure to file payroll taxes is a very big deal and this is one headache that don’t want to have going forward.

You do need to speak with someone who knows what they are doing to set you up so that going forward you can do this yourself.

Speak to people that you work with on these freelance jobs and get one or two referrals. Remember this person is only doing the calculations for you, you are not giving them access to your checkbook.

Are you in New York City as your ID seems to indicate?
Call the accounting departments at Pace or Baruch and see if they can find someone for you.

SRM

Also you mean 1099’s, not 1090’s.
The employer or entity that hires an independent contractor is required by the IRS to file a 1099 form which enumerates the amount paid to the contractor and whether any taxes were wittheld. This must be mailed by January 31 of the year following payment to the contractor.

Yes, you’re right. Thanks!

Waiver of Penalty

The IRS can waive the penalty for underpayment if either of the following applies.

1. You did not make a payment because of a casualty, disaster, or other unusual circumstance and it would be inequitable to impose the penalty.
2. You retired (after reaching age 62) or became disabled in 2006 or 2007 and both the following requirements are met.
   1. You had a reasonable cause for not making the payment.
   2. Your underpayment was not due to willful neglect.

http://www.irs.gov/publications/p505/ch04.html#d0e17005

I wouldn’t assume you won’t be penalized.

IRS Quarterly Estimated Tax Payments FAQ

You really do want to pony up the money for a CPA. I resisted it myself…...but there are some things that are worth it…..it will be a weight off of your shoulders. Someone is paying you for your expertise and you need to realize that this is something you just don’t know how to do…...

CPA’s generally charge per hour and/or per tax form you ask them to fill out…..

Some ways to save money:
*Be extremely organized.
*Have your CPA figure out what your quarterly estimates will be going forward and take care of getting it paid yourself (i.e. don’t have CPA send you reminders and stamped envelopes)

For right now, get yourself a CPA and get your estimates in…..NOW.

If you insist on doing it yourself, you will need to search for www.irs.gov for the federal estimated tax worksheet.
Keep in mind that in addition to federal estimated taxes, you owe state estimated taxes and possibly municipal estimated taxes for any city you have conducted your freelance work in…...

Good luck!

Think about the amount of time you spend thinking, worrying, and trying to figure this out, and once you realize a Tax accountant would have this all done with the paper work filled out and probably saved you some cash and probably have gotten you a return for next year, you’d realize that it’s a good idea.

Trying to do it yourself is a huge pain in the ass, and you’ll probably do it wrong. And as for not being able to afford it, it’ll pay for itself in 2 years with the money you save, if you plan on freelancing for any significant amount of time.

Alright I hear everyone on the accountant hire… Question now: if I haven’t been amazingly organized (ie. saved all my pay stubs) am I screwed? Should I go through my bank statement and find out all the money I have made or what?

You need to know how much you made from each vendor. If it is over $600 in a year, you will get a 1099 in Jan/Feb 2009. If it is under $600, you report it as miscellaneous income.
(For every 1099 you get, a copy goes to the IRS, FYI)

You also need to keep a record of any work related expenses.

You will also need a copy of last year’s tax forms.

Focus on that and getting someone to suggest a good CPA to you…..

At this point it is estimates. The gov’t only gets uptight if they find you underpaid them w/ the estimates come April 2009 tax time. So estimate your income high, if you aren’t sure….