When are you supposed to do taxes if you're a contractor?

Question

Wait...what the heck?

Aren't you supposed to do them in April the following year like everyone else? i.e. mail in your 2008 taxes by April 2009?

Someone told me you're supposed to do them quarterly, but then someone else told me he didn't and just sent them in April and was fine.

Then I found somewhere else that they're due by December of the year you're doing them for? i.e. December 2008 for all your 2008 taxes? Is that something else?

I want to do all my taxes at once, so I thought I would set aside my tax money in a savings account or CD until May 2009...no?

Answer 1

What you do is pay an estimated Federal Tax quarterly.  And State Tax quarterly.  Otherwise penalties are added to the amounts due.  

Answer 2

You make quarterly payments in April, June, September and January.  You then file your tax return by April.  You cannot just set the money aside until you file. That would trigger penalties and interest for underpayment of estimated taxes.

Income taxes are due when the money is earned. Employees have taxes withheld from each paycheck.  Self-employed folks are allowed to just pay quarterly in the interest of keeping it simple.  You can make more frequent payments if you wish though few people do.

Answer 3

You should pay them quarterly but like you I pay mine yearly, it's easier and yes the IRS charge an extra $200 for not paying quarterly. I like to do everything at once. You're fine. Like you I will be doing my 2008 taxes in 2009 and mailing them in by the deadline, which will be April 15, 2009. they are not due by December 2008. The end of the fiscal year is December 31, 2008.

Answer 4

for some people its a hasstle to pay quarterly.  they would much rather pay in april like most everyone else.  yes, this means they have to pay a penalty and interest, but its not so bad that they dont do it any more.  they just see it as part of doing business.

Answer 5

Your annual return is due in April just like if you were an employee.  But since taxes aren't deducted from your paychecks, you need to estimate them and send them in quarterly, with form 1040ES for federal.  If you owe more than $1000 when you file your return in April, you'll be penalized for not making the quarterly payments.