Can someone tell me, do you have to pay taxes on the commissions you earn? Just wondering and at the same time, how much has to be paid from the earned commissions and how do I go about paying those taxes. Those who are of U.S. Residency I mean... can you answer this for me After all, the W-9 was submitted so I'm sure the IRS wants a piece of something
Talk to a tax professional. You will have to pay tax (income tax + self employment tax) come April 15th. Estimated taxes may also have to be paid:
Talking to a tax professional is too much hassle to be honest because all they want to seem to talk about is what THEY get out of the deal (I've talked to a few already before when I was going to start my business up about a year and a half ago.) Could you please just explain it to me. I'm already aware (have been) that 15.3% is the Self-Employment rate (12.2% is social security and 2.4% is medicare.) Or something along those lines. So I know I need to withhold at least 15.3% of my earnings to pay the taxes. How would I pay them and what happens if I don't? Just trying to cover the basis here
I pay at the end of the year when I file my taxes. I have extra taxes withheld from my pay at my job, so at the end of the year I do not have to pay and I do not worry about paying quarterly. If you think you will owe it would be in your best interest to pay the estimated tax quarterly so you do not get hit with a big bill and/or penalty at the end of the year. If your not making a large amount right now I would just wait till the end of the year and see how it goes, tax software like turbo tax will help you with paying your quarterly estimated tax(if you use it). Right or wrong, that is how I pay mine.
I just started and only made $402.95 for the month of January. I would rather pay it quarterly though but I'm not making enough to even be considered someone who has to pay quarterly. Bottom line, I'm assuming I only have to pay 15.3% of whatever net earning I make? What about tax deductions (Gotta love them gifts) Also, I use TaxAct software, do they allow you to pay your quarterly taxes?
If you keep that pace you might be safe, but if you really start earning you may want to pay something. Remember, just like paying through your paycheck, if you pay to much you will get it back. Write off as much as you can for deductions. Hosting, domains, anything related to your biz. Just be careful with things like home office and such, they can get really picky with that. Just make sure you meet the requirements. Read up at the irs website, they have a lot of good info. TaxAct should be able to help with the quarterly taxes.
Thanks cfd... thats great, I didn't even know hosting and the domain could be written off How about my internet portion of my cable bill "since I apparently need internet to run my business" thats a $396 write off right there ($33 a month, and it'll go up as soon as the 24 month promotion is out around the middle of 2009)
You should be able to write off a part of it, your best bet is to read up at the irs website. There are probably some really good tax related forums also, where you could get some more info.