I just found out that I was supposed to sending quarterly taxes as a 1099 independent contractor. Will I be penalized if this is my first year? I think I am too late for this year!

It is what it is at this point, I will assume you have been putting back a percentage of your pay to pay the taxes,
Plus the additional 7.5 percent you will be paying in self employment taxes.

You can still submit the 3rd quarter estmated income tax payment (even though it was due Sep 15), and then the 4th quarter estimated payment which is due Jan 15. It's best to mnake your late payment as early as you can, to reduce the interest charges that are accruing. And as Fr-Chuck pointed out, you must also pay self-employment tax, which is your social security and Medicare taxes, but the rate is 15.3%, see: http://www.irs.gov/businesses/small/...=98846,00.html

Since this is the first year, when you submiit your 2010 income tax return in early 2011 you will owe interest for late payment on the lesser of (a) 90% of the tax bill, or (b) the portion of your underpaid taxes that is equal to your total tax bill from 2009.

If this is your FIRST year, you can settle up with the IRS come 15 April 2011 and pay NO under-payment penalties, because you are covered by one of the "safe harbors" that allow you to avoid such penalties.