Estimated Tax _ Irs Form erro r ?
Q.I am attempting to calculate my estimated Self Employment tax for last quarter (I'm a little late:) and I am not comfortable with this worksheet. I think it is wrong. Column one (1/1 to 3/31) of the worksheet looks like this: 27. Net earnings from self-employment (Lets say mine is $8000) 28. Prorated Social security tax limit: $20,100 29. Enter actual wages for the period subject to ss tax: (I assume this would be $8000) 30. Subtract line 29 from line 28: (Here is where I have issues with the Irs form. In my case this value would equal $12000) If I had made $20,100 for this period, this value would be zero. 31. Annualization amounts: 0.496 32. Multiply line 31 by the smaller of 27 or 30: In my case this is $8000 * .496 (~$4000), again if I had earned 20,100 this would be zero. 33. Annualization amounts: 0.116 34. Multiply line 27 by line 33: In my case this is ~$900. If I had earned 20,100 this value would be $2331. 35a. Add lines 32 and 34. Enter the result here and on line 13 of section A: HERE is where it becomes evident that something is NOT right. In my case this value is ~$4900 according to the worksheet. However, if I had earned over twice that at $20,100 This value would be $2331(2331+0)? So according to this Irs form, if I made twice as much - I could estimate my self-employment tax at half as much?? 35b. Annualization amounts: 8 35c. Deduction... (divides estimated se tax by annualization amount) As I have pointed out in line 35a, the numbers don't mesh. Anyone have a better method for estimating annualized self-employment tax? And if the worksheet IS wrong and I report it first, do I get an IRS T-shirt
A.Why aren't you using ZERO since you mention no employer other than yourself? Net self-employment income is NOT A WAGE. Wages are paid by an employer and have had taxes already withheld. eing self-employed, you have ZERO wages Assuming this was wages paid by an employer, yes. Then you wouldn't need to pay estimated taxes. But your employer paid wages are ZERO. Once you make the mistake on line 29, the rest of the form is going to follow the mistake
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