Estimated Tax – How much do I pay for estimated tax if I expect to make a lot less than the year previous?

J D: Estimated Tax – How much do I pay for estimated tax if I expect to make a lot less than the year previous?
Hello, I have made quite a bit less than expected and am not sure whether or not I will owe any taxes after the standard deduction… How much should I pay for estimated tax? If I overpay in estimated tax, what happens?

Answers and Views:

Answer by De Deuce
It is TAX time. Time ti FIGURE your taxes owed, not the estimated tax.

Once you get to the bottom of the 1040 form and the calculation says you ows THIS MUCH, send THIS MUCH to the IRS. No estimatin’ needed.

Estimated tax transfers are based on your tax estimation for the FOLLOWING year. A good estimate is 15-20% of gross salary received. If you work for someone and receive a wage each week, they are required by larw to withhold a portion of youe paycheck each week based on your W-4 statement of withholding. You need to do nothing else.

If you are an independant contractor, you need to withhold 15-20% as said for income tax, PLUS 15% more for SS/FICA/MEDICARE witholding.

If you withold too much, (keep records of the amount sent forward) the excess will be returned to you after you file your taxes next year, assuming you show the amount sent in and the actual taxes due.

Answer by Anna
You estimate what you are going to make. Look at the 2007 tax rate schedule and find the tax amount that fits that salary and filing status. (Tax rates probably won’t change that much this year, so using 2007 rates will be just fine.) Use this tax amount determine if you need to pay estimated tax for 2008.

When you file your tax return next Spring, you get credit for the estimated tax you paid in. If you paid too much, then you get it back in your 2008 refund.