@Jennifer Escalona Dunn – Thanks again for all the help! Keep on making Outright awesomer:)
@Diane – Ahhh, I didn’t catch that – thanks :) I don’t know anyone who pays 50%, but I know someone who pays almost 40% (ME) and it sucks… esp since I wrongly assumed I’d be paying less once going self-employed. Bleh.
@Lance@MoneyLife&More – You totally should, even w/ the friends/hookups. I know how it all works in general, but the reason I use Outright isn’t for the quarterly tax stuff at all actually, just their tracking system of all your income and expenses! Makes life sooooo much easier, and just freakin’ glad I paid attention long enough to finally give them a try :)
@Edward Antrobus – That does make sense actually, but I’m not the right person to know either, haha..
@Carl Lassegue – Glad you liked it! Things def. change when you go outside the 9-5 world :)
@Brent Pittman – Getting started is always the hardest, but once you get going you’ll be fine. Don’t let us all scare you :)
@Melissa@LittleHouseInTheValley – Ooh la la, well welcome to the club my friend! :)
@Diana – Thanks! GREAT info for sure, totally forgot about getting your main gig to change the withholdings like that, good call. Hope you’re well, friend!

There is a certain threshold of earnings you need to hit before you have to pay estimated payments. As a self-employed person, IF YOU EXPECT TO OWE $1,000 OR MORE IN TAXES, then you must make estimated quarterly payments. Straight from the IRS: Estimated Taxes

There is a caveat, “If you receive salaries and wages, you can avoid having to pay estimated tax by asking your employer to withhold more tax from your earnings.” This includes couples who file jointly. If I earn enough to need to pay quarterly, but he has more withheld to make that up, then I will not need to make quarterly payments.

Dianne, If the highest tax bracket is currently 35% and self-employment tax is currently 12.2%, that adds up to 47.2% which is close enough to half in my book. Sure not half of all of your income goes to taxes, but when you include state income taxes, marginal rates could exceed 50% for self-employed individuals. But that’s just my understanding of how things work, I could be mistaken somewhere.

I’m so glad so many of you found this guest post helpful. And hiiiii to fans of Outright! (Looking at you, Carrie and Laura!)

Edward Antrobus III – the answer to your questions is that you must OWE over $1,000 in taxes by the end of the year in order to be responsible for quarterly estimated taxes. Keep your tax credits (earned income, education credits, etc.) in mind, too. But if you do end up owing $1,000+ to the IRS in April and you didn’t pay quarterlies, you’ll be looking at tax penalties.

@Diane – I thought I’d be doing the same thing too, but it seems my income fluctuates so much over time. At least the year and a half I’ve been self-employed so far, which is barely anything ;) I like the simplicity of it all though!
@Kara – Right?? I found that out only after going on my own too – was not a happy surprise :( Though I am getting used to it already now, so at least that’s good. Just means we gotta make even MORE money, yeah? ;)
@Diane – 50% is def. high – who’s saying that here, though?
@Emily @ evolvingPF – Oh yeah, and sometimes it comes as a shock too ;)
@20’s Finances – Yeah you do! A week left to go! (I just put mine in the mail yesterday, and then vomited a little, haha… mine are $8,000 a quarter ;))
@Carrie Smith – Awesome!!! I had no idea but I’m so glad you’re in the same boat here :) One of the best tools I’ve found for business too!
@Laura – Cool! Their weekly profit/loss is pretty interesting too – though it always freaks me out ;)
@PB @ EconomicallyHumble.com – Glad you got something out of it – I was a bit worried people would glaze over :) Although if you don’t care about quarterly taxes I’d be doing the same, haha…
@Edward Antrobus III – I don’t know what the numbers are myself (maybe someone at Outright could help us?) but I do believe there is one. I mean even when I was working a 9-5 I was supposed to have been paying quarterly too cuz of the diffence of profit coming in towards the end – and I had no idea! Luckily I paid up and didn’t get in trouble from it all, but you’re right in that at some point you DO have to start paying quarterly… I’ll try and get an official answer here for you :)
@Jenna, Adaptu Community Manager – Haha… oh yeah, that’s a whole other ball game ;)
@Brian – And not a bad problem to have there either, huh? ;)