Adsense + Normal Job and paying Estimated Taxes

I have a regular 9-5, with 0 allowances

[loganz]

Quick question about paying estimated taxes. I have a normal 9-5 job, my allowances are 0, and I pay a lot of taxes every paycheck.

My Adsense revenue is good, but if I go with the 15% SE tax rate, it does not equal more than what my usual tax return is.

So, are there any reasons why I would still need to pay estimated taxes (penalties.. etc)? I am hoping it just evens out at the end of the year, get a smaller refund, or just owe a little bit if I make a lot from Adsense (optimism).

[netmeg]

Talk to an accountant.

[Edge]

Loganz, I been doing the self employed, small company thing for more than ten years.

First, I live in Georgia and we have a state income tax. If this is your first year - don't worry about quarterly taxes; however make sure you keep 45% of net earnings for the tax-mafia. Keep 40% for the federal government and 5% for the state folks if applicable. This is safe and sound advice though you will likely overpay and get a refund. I have seen and heard of folks over spending their first year profits and then go out of business trying to pay back the tax money they spent – don’t get caught in this trap.

The second year and there after that you are in business and making a minimum amount (I don’t know what that number is) you will need to pay quarterly taxes. This is not that big of a deal, just calculate what you owe and write a check and mail it.

Be aware that if you accept and process sales taxes that you will need to file local sales tax forms and pay. Where I’m at they want me to do this monthly.

This is what I do to determine quarterly taxes:

Gross – expenses (cost of doing business) = Net earnings

(Net Earnings) x 0.40 = Pay to Fed
(Net Earnings) x 0.05 = Pay to state

At the end of the year I always use an accountant to file my taxes – costs me about $500. This is my reality check and she knows what can be written off and not. For example, you can write off a portion of your home (office space) if that is what you do. You can also write off gas, travel, 50% of food, internet, hosting, phone, computers, etc…

[wheel]

Track every expense even remotely attributable to the earnings. Where I am, these expenses offset the income. Possibly you can offset the entire amount of the additional earnings.

Your computer, your phone, trips to the post office, your computer desk, your hosting,maybe even part of your heating/cooling/utilities if you're working from home, etc etc etc. These are things where an accountant earns their pay. If you make $15K and have to pay $3K tax, or you pay an accountant $1K and they show you that in fact you don't have to pay tax on that income the first year, you both win.

[Edge]

An easy way to track direct business related expenses is to have a credit card or equivalent dedicated to all business related purchases – never use cash.

I can download from my bank a quicken file (.qif) every month and categorize my expenses.

Makes it easy to determine where your money goes.

[netmeg]

Yah, I had to switch to Quicken on account of MS Money finally getting the heave; they have a version of Quicken that's for "Home and Business" that was just perfect; makes it very easy to track everything and put it into its proper category. My accountant will be thrilled - next year I'll have everything in EARLY.

[expat123]

Simulate your return at
[turbotax.intuit.com...]