How much estimated tax should I pay if I've only made around $200 in a quarter? Too many family emergencies.

Question

I'm new to being a business owner.

Answer 1

I'd say you should not pay any estimated tax. But you should consult an accountant.  You will need one anyway when you start earning more profit.

Answer 2

On $200 for the quarter. you'll owe around $29 self employment tax and no income tax.  No point in filing a quarterly return for that amount.  Good luck for the rest of the year, for less emergencies and more business....

Answer 3

What you earned is called Gross Income.  From the Gross Income you deduct your expenses, (See Schedule C on the IRS web site at www.irs.gov).  Once you deduct your expenses you have Net Profit.  The Net Profit if reported on your Form 1040 and Self Employment Tax is computed on Schedule SE.  If the amount of Self Employment Tax is greater than $400 for the year then you owe Self Employment Tax.  The IRS requires that you make Quarterly Estimated Tax Payments on the amount of expected income.  As long as you Quarterly Estimated Tax Payments are 90 percent of the current year taxes or 100 percent of last years taxes then the IRS will not access a penalty.

Answer 4

Skip the estimated taxes for this quarter.  Should you start making more income in future quarters, then include the $200 in calculating the estimate to be made.  Next one is due September 15th, (for the third qtr.) and January 15, 2009 (for the fourth qtr.)  

If your overall liability is less than $1,000, you can make payment with your tax return.  Also, if you (or your spouse if filing jointly) works, you can have a little extra withheld to cover any liability from the business.

Hope this helps.