I work under the 1099 Taxes. So I basically work as a contractor for a company in the Chicago IL area. Currently I am setting aside 20% of my bi-weekly check and saving it to pay for taxes come January.

Is 20% enough?

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    Your total tax balance owed to the government will be based on many factors, especially your income. If you earn $5k, your tax balance will be $0. How much do you earn, when did you start working, what deductions will you be able to take, etc. – Grade 'Eh' Bacon Jul 26 '19 at 14:42
  • 30/hour but no deductions. I know I can't deduct Lyft. I wish. I started working First week of June and until First week of January. – Treewallie Jul 26 '19 at 14:51
  • and how many hours a week will you be working? – Grade 'Eh' Bacon Jul 26 '19 at 14:52
  • 40 hours a week sir Bacon – Treewallie Jul 26 '19 at 14:56

Is 20% enough?

As a self-employed 1099 contractor, you are required to pay your federal income and FICA taxes quarterly. In order to calculate what you owe for your first quarterly payment, you will need to fill out form 1040-ES. This will give you a good estimate of what your full year taxes will be, and how much you will need at each installment--better than guesstimates or rules of thumb from strangers on the internet.

Of course, you may have additional more targeted questions after working through the 1040-ES (or while working on it) that you could bring back here.

Similarly, Illinois has a it's own 1040-ES with which you can estimate the state portion of your taxes.

  • According the site for me over 9,700 but not over 39,475 is $970.00 = 12% total Federal taxes. Plus the Illinois documents says 4.95%. So total of 16.95%. I have been saving 20% but I am ready for 30% if need be. I am just going to go to H&R Block just to be safe. I don't want to mess this up. I just need to put in the information of the company that has been paying me for the contract? – Treewallie Jul 26 '19 at 18:27
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    @Treewallie I don't think you're including the self-employment FICA taxes from line 9 (and included worksheet) of the 1040-ES. – user4556274 Jul 26 '19 at 19:01
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    For Federal at least (and many states but I don't know IL) if you didn't have any tax liability for the previous year, you don't actually need to make the estimated payments -- there's a safe harbor from the 2210 penalty and you can pay up til April 15. (You do need to have the money available then. And this is only the first year.) Note the 'quarters' are April June,Sept Jan, which are not truly quarters. – dave_thompson_085 Jul 26 '19 at 22:01
  • I looked at Line 9 for FICA Taxes and didn't see a number. What are FICA taxes? – Treewallie Jul 29 '19 at 12:50
  • FICA are the taxes to fund Social Security and Medicare. Line 9 on page 8 of the 1040-ES is labelled "Self-employment tax", and requires you to first complete the worksheet on page 6. – user4556274 Jul 29 '19 at 13:11

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