Who Must Pay Estimated Taxes?
If, like the vast majority of self-employed people, you are a sole proprietor (that is, you own your own business), you have to pay estimated taxes if you expect to owe at least $1,000 in federal tax for the year. However, if you didn’t have to pay any taxes last year — for example, because your business didn’t make a profit or because you weren’t working — you don’t have to pay any estimated tax this year, no matter what you earn. This rule applies only if you were a U.S. citizen or resident for the year and your tax return for the previous year covered the whole 12 months.
If you had a tax liability for 2007, you may have to pay estimated tax for 2008. General Rule You must pay estimated tax for 2008 if both of the following apply. • You expect to owe at least $1000 in tax for 2008 after subtracting your withholding and credits. • You expect your withholding and credits to be less than the smaller of; 90% of the tax to be shown on your 2008 tax return, or 100% of the tax shown on your 2007 tax return. Your 2007 tax return mustcoverall 12 months. For more information: http://www.irs.gov/businesses/small/article/0,,id=110413,00.
If, like the vast majority of self-employed people, you are a sole proprietor (that is, you own your own business), you have to pay estimated taxes if you expect to owe at least $1,000 in federal tax for the year. However, if you didn’t have to pay any taxes last year — for example, because your business didn’t make a profit or because you weren’t working — you don’t have to pay any estimated tax this year, no matter what you earn. This rule applies only if you were a U.S. citizen or resident for the year and your tax return for the previous year covered the entire 12 months.
