Putting $ Aside for Taxes

[Patches]

How shold i be doing this? My husband claims 1 and I told him to start claiming 0 but should I be having him take out extra or just set aside some of my income each month? :confused: I'm so confused and taxes scare the living daylights out of me! Help! I need someine to walk me through this.
Might be important: I got licensed in Nov 2012, opened Dec 2012, enrolled my first client Dec 28th? 2012, but he did not physically start until Jan 2, 2013.

[TheGoodLife]

^Ditto for this question

[melilley]

Same here! You see all the questions and answers on here and everything is so confusing! I asked how much to put away on here before and someone told me 20%, but I'm sure it changes if your husband takes out more..interesting question! Also you don't start doing anything until the first child physically starts so for 2012 you don't have to worry about it, but you can still claim deductions for things you bought in 2012 in the 2013 tax year. I too asked this because I bought a ton of things for my daycare in 2012, but I have yet to start a child and that's the answer I received. I'll have to check back about your first question, I too am interested in the answer!

[itlw8]

for years I had dh claim married at a higher single rate 0 deductions.

Then when our boys got older I had to have extra taken out. With the stimulas I have been getting a refund because we never took that extra off.

this year We have changed he still does 0 at a higher single rate but only 25 extra the rest is going into the retirement.

[TomCopeland]

estimated taxes

Trying to figure out how much tax to put aside is always complicated!

I've used the figure of 20% as a ball park estimate of what you would owe in federal Social Security/Medicare and income taxes on your gross income. Let's say this amount is $4,000 for the year. If you are already getting a $5,000 refund, you don't need to have your spouse withhold any more. Your husband can choose to lower his claimed exemptions or simply tell his employer to set aside an additional specific amount each pay period for these taxes.

Since you are only starting to earn income in 2013, you can do the following: Look at how much tax you would owe for 2013 by estimating your gross income (parent fees and CACFP reimbursements) and multiply by 20%. This is the estimated tax you will owe for 2013. Let's say this amount is $4,000. If you got a refund of close to this amount in 2012 and your husband's income for 2013 is going to be about the same as 2012, you don't need to worry about having more taxes withheld from his paycheck. If you got a $1,000 refund in 2012, have him withhold about $3,000 more for 2013.

Reevaluate your income and estimated taxes each quarter. After the end of March see if your estimated income for 2013 should be adjusted. If so, then you may want your husband to withhold more going forward or less. Do this reevaluation every 3 months.

[Patches]

Trying to figure out how much tax to put aside is always complicated!

I've used the figure of 20% as a ball park estimate of what you would owe in federal Social Security/Medicare and income taxes on your gross income. Let's say this amount is $4,000 for the year. If you are already getting a $5,000 refund, you don't need to have your spouse withhold any more. Your husband can choose to lower his claimed exemptions or simply tell his employer to set aside an additional specific amount each pay period for these taxes.

Since you are only starting to earn income in 2013, you can do the following: Look at how much tax you would owe for 2013 by estimating your gross income (parent fees and CACFP reimbursements) and multiply by 20%. This is the estimated tax you will owe for 2013. Let's say this amount is $4,000. If you got a refund of close to this amount in 2012 and your husband's income for 2013 is going to be about the same as 2012, you don't need to worry about having more taxes withheld from his paycheck. If you got a $1,000 refund in 2012, have him withhold about $3,000 more for 2013.

Reevaluate your income and estimated taxes each quarter. After the end of March see if your estimated income for 2013 should be adjusted. If so, then you may want your husband to withhold more going forward or less. Do this reevaluation every 3 months.

Thanks. That helps a lot, but what about state taxes?

[TomCopeland]

state estimated taxes

Thanks. That helps a lot, but what about state taxes?

Each state has their own rules about state income taxes. Some states don't have state income tax. The amount of tax is usually always much lower than federal taxes. You should also look to see how much extra state taxes you will owe for your business and either have your husband withhold extra state taxes or file state quarterly estimated taxes.

[TheGoodLife]

I've heard that some people make quarterly payments, and that you can be fined if you don't make them and you end up owing at the end of the year. Since this is my first year, I don't have a clue what to expect since we'll be having so many more deductions. (I'm very small so I have a feeling I won't need to make payments, but I sure don't want to risk any fines!)

[TomCopeland]

estimated taxes

I've heard that some people make quarterly payments, and that you can be fined if you don't make them and you end up owing at the end of the year. Since this is my first year, I don't have a clue what to expect since we'll be having so many more deductions. (I'm very small so I have a feeling I won't need to make payments, but I sure don't want to risk any fines!)

The IRS rule says that you must pay at least 90% of the taxes you owe each quarter of the year or there is a penalty. One way to avoid any penalties is to have withheld in 2013 (through either quarterly payments or your husband's withholding) an amount that is greater than the taxes you owed in 2013. So if your tax bill was $4,000 in 2012, withholding or paying estimated taxes of $4,001 in 2013 will avoid any penalties, even if you owe more taxes in 2013.

[KnoxMom]

Thanks for the info Tom! Also, here is a link to the irs form 1040-ES which helps you estimate your taxes and gives the quarterly due dates (April 17, June 5, September 17 and January 15th of the following year) as well as how to pay it. This is based off of 2012. I just received my IRS tax calendar and business guide for this year in the mail, but hadn't had a peek yet. If it differs, I'll update it here. You can order this for yourself on their website as well. Hope this helps!

[MonkeyingAround]

Thanks for the info Tom! Also, here is a link to the irs form 1040-ES which helps you estimate your taxes and gives the quarterly due dates (April 17, June 5, September 17 and January 15th of the following year) as well as how to pay it. This is based off of 2012. I just received my IRS tax calendar and business guide for this year in the mail, but hadn't had a peek yet. If it differs, I'll update it here. You can order this for yourself on their website as well. Hope this helps!

Knoxmom what is the link? I'd love to check this out.

Also where did you get the IRS tax calendar and business guide???

THANKS!!!

[KnoxMom]

Knoxmom what is the link? I'd love to check this out.

Also where did you get the IRS tax calendar and business guide???

THANKS!!!

I'm sorry, just now seeing this!! Here is the link:

http://www.irs.gov/file_source/pub/irs-pdf/f1040es.pdf

Also, here is the link to order the Tax Calendar and Small Business Guide: http://www.irs.gov/Forms-&-Pubs/Order-Products