How Do I Pay The IRS Weekly?

Question

I just started working for myself. I started a company in which I pay myself as an independent contractor. How do I pay into the IRS weekly from my bank's automatic bill pay and how much should I pay into it? I expect to earn around $35,000 this year.

Answer 1

You do not send weekly payments. Read more about self employed tax filing: http://taxipay.blogspot.com/2008/04/tax-...

Answer 2

I too own a small business and as a rule of thumb I take my Profit and Loss statement and make sure i set aside 50% of what the bottom line profit shows for taxes as you will be paying both the employer side and the employee side and it ends up right under 50% overall.

It is painful and you really have to watch your P&L statement closely as the tax burden can add up really quickly and it is important to watch it carefully.  

On another note, don't forget to make depreciation entries and take all of the small business write off's availible to you.  Both of these items come right off the bottom line of your P&L and can really help out.  

I always set the 50% aside and make all of my depreciation entries and figure all of the other write offs i get at the end of the year before handing it off to my accountant.  I do this because once those items are applies to my bottom line i ususally end up with a nice piece of money that is like getting a refund in many ways.

Disclaimer (sorry, i need to add this to my post)

I am not an accountant and am not offering any form of accounting or legal advice in this post, it is informational only from my perspective and should not be used to make any decisions.  Always consult your tax advisor, accountant, and legal counsel for proper methods.

Answer 3

Why would you want to pay the IRS weekly?  It is better to pay quarterly and you can adjust your payments over the course of the year.  payments are typicall paid april, july, sept and Jan. of the next year.  you can follow the instruction on for 1040es for making payments.  you should probably estimate your tax based on about 25% of your net/take home.  and if your state has tax, another 5%.  these are just rough estimates.  

http://www.irs.gov/pub/irs-pdf/f1040es.p...

Answer 4

You don't pay weekly, you pay quarterly.  You should pay 1/4 of the tax (income plus self employment) that you expect to owe for the year, each quarter.  The self-employment tax will be around $4945 for the year.  Your income tax depends on a number of things not included in your question, so no way to tell that.

Answer 5

Things to keep in mind.  You pay income tax and self employment taxes based on your net profit from self employment.  The best way to find your net profit is to keep an accurate profit and loss statement on a weekly basis.

According to the Estimated tax instructions; if you are required to make estimated tax payments you must make them at least quarterly, however you can make them more often.  The1040 ES has worksheets in it that will help you to determine how much you need to pay based on an annual basis.  If you want to pay weekly you may find a better method by using the amounts listed in the weekly payroll tables in pub 15 and adding %15 for social security taxes.

You probably can't use your banks bill pay option, but you can still pay over the Internet using EFTPS (electronic federal tax payment system).

These are all places to start, you may still have to contact IRS by phone or visit the local office or consult your tax adviser for more help.

Answer 6

The IRS may only offer you are quarterly payment set-up since I have never heard of a self-employed person being able to make payments more frequently than that, but I could be wrong.  www.irs.gov could probably answer any questions you might have.

Answer 7

It depends.  Did you create a legal entity to shield you from liablity or are you operating as a sole proprietor?  Do you have any business partners?  If so, there are different tax consequences and you have to pay the IRS on a different schedule.  

You should also be aware that you might not be an independent contractor.  Instead, you may be simply self-employed.  There are big differences in the tax withholding and reporting requirements for each of these.  

I would direct you to the IRS's Publication 15.  If that doesn't resovle your question, then you should contact your tax adviser.  

Kreig Mitchell

www.irstaxtrouble.com