12 Mar Have You Been Paying Taxes on Your Side Hustle Income?
You have undoubtedly seen or heard stories about enterprising folks who pivoted during the pandemic. We’ve certainly seen a lot of them here at our CPA firm in Boca Raton. If you are one of these enterprising entrepreneurs, tax preparation and planning this year may be a little more complicated than what you are used to.
With the havoc that Covid-19 has wreaked on our economy, many Americans found themselves challenged to find a new way to keep money coming in. Others suddenly had to supplement their family’s income.
Everyone who has made lemonade out of the lemons that Covid-19 dealt them is to be congratulated. You may have been so focused on keeping your head above water that you didn’t have time to dot all your i’s and cross all your t’s. That’s completely understandable, so don’t beat yourself up about it.
Do You Need to Make Quarterly Tax Payments?
As the IRS explains, “Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.”
How Do You Figure Out How Much Tax You Need to Pay?
The IRS provides Form 1040-ES to help you figure out what your estimated taxes will be.
The estimate is based on your expected adjusted gross income (your total income minus certain deductions). “When figuring your estimated tax for the current year, it may be helpful to use your income, deductions, and credits for the prior year as a starting point,” the IRS says. Use your prior year’s federal tax return as a guide. You can use the worksheet in Form 1040-ES to figure your estimated tax.”
Of course, that advice isn’t much help if you started a new venture during the pandemic. If that’s you, you might have already started a search for “accountant near me.” If you are in South Palm Beach County, our Boca Raton accountants are nearby and ready to help. We are specialists in tax preparation and planning and can help you get you’re the financial side of your new business in order.
Contact us if you would like to discuss it.