4

I receive payments from iTunes Connect, and no income tax is being withheld from those payments (I am receiving the entire earnings), and I have been trying to find out how I pay Federal Income Taxes without them withholding the income tax rates. Should I file and pay an Estimated Income Tax form, or wait and do nothing until it is time to file an Annual Income Tax Form.

If I do file an estimated income tax form, how do I adjust the amount if at the end of the year when I pay annual income tax, my estimates were too low or too high?

3
  • 3
    Go to the IRS web site and look for Estimated Tax payments. They have all the forms and instructions. Also, see this question and its answers for lots of useful information. Finally, if your sole income is not from iTunes Connect and you have a job that pays you a salary and withholds income taxes, you can ask your employer to increase the withholding by a certain amount (file a form W-4) that will cover the taxes on your iTunes Connect money. May 20, 2012 at 22:46
  • +1 to dilip's comment, far easier to withhold extra from one's salary than to file quarterly. May 21, 2012 at 18:02
  • @JoeTaxpayer And of course as you well know, regardless of when the tax has been withheld, it can be treated as having been withheld uniformly throughout the year. Since the OP has missed one quarterly payment of estimated tax on Form 1040-ES, going the withholding route will "fill in" the gap and avoid penalties. May 22, 2012 at 0:20

1 Answer 1

3

I am not an accountant. However I am an independent contractor.

When making money, it's best to estimate the taxes. Especially as you make more money.

For two reasons:

  1. It's very easy make more money than you think and have a large tax debt at the end of the year (ask me how I know)
  2. If you don't estimate your taxes and incur profits, you will be penalized by the IRS for not making your quarterly estimated tax payments.

Your estimates will never be spot on, no worries everything will be reconciled when you file your return.

2

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .