[fibian]

I graduated not too long ago and started working for a company as an independent contractor. I was just "promoted" to a "temporary" worker which will most likely turn to a permanent position. I mentioned to HR that I was just paying too much taxes and he mentioned I should be filing quarterly taxes as a contractor.

Up until last year, my parents did my taxes. I did research for the quarterly taxes, but I'm just not too familiar with any of this. Can someone help me out with this? Can I still make estimated payments, if I've already missed two payment deadlines? I'm in CA.

[ebaines]

As a self-employed contractor you should indeed be paying estimated taxes quarterly, or else risk getting socked with interest charges when you file your 2014 taxes in April 2015. To file estimated quarterly taxes you use form 1040-ES for federal taxes and 540-ES for CA taxes. You make an estimate of your taxes that will be due for 2014, and make payments by April 15, June 15, Sep 15 and Jan 14. As long as those payments equal at least 90% of our actual tax bill or are at least as much as your tax bill from 2013 you will avoid penalties or interest charges. Don't let the fact that you missed the April and June deadlines stop you from filing you first payments late - at least it will stop the clock on interest charges. You can get info on fereral estimated taxes here: Form 1040-ES, Estimated Tax for Individuals and CA Franchise Tax Board info here: https://www.ftb.ca.gov/individuals/faq/ivr/208.shtml

[AtlantaTaxExpert]

Everything ebaines posted is accurate.

However, if 2014 is your FIRST year filing as an independent contractor, you will likely avoid interest charges when you file your 2014 return in 2015 and pay the required taxes due to the "first year" safe harbor.

Do NOT let that first year safe harbor prevent you from filing the quarterly estimated taxes, however. That tax bill can get mighty big and really strap you financially if you have not put aside money to make the payments.

Further, you WILL have to make the quarterly payments starting on 156 April 2015 if you remain an independent contractor. Better to make the payments and have some type of credit to offset the tax bill that will be due on 15 April 2015.

[fibian]

This will be my second year filing as an independent contractor. I worked on contract last year for a couple of months.
I'll have to account for the whole year this year, if I don't become permanent by the end of the year.

I'm definitely going to make late payments on the last 2 quarters as soon as I can.

For the 1040es, line 1a, do I have to calculate how much income I'll be making in 2014 or just for that quarter? It says to look at Schedule C. do I need to use my 2013 taxes for this?

Thanks for all your help.

[AtlantaTaxExpert]

You need to estimate your income for the entire year.