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I have had no income for the past year until the 4th quarter in which I made approx $2500 as a private contractor. Do I need to pay an estimated tax for that quarter?

I've heard that if you're income for the year is less than $6100 then you don't have to file taxes, but I don't know how that affects paying taxes.

  • I've answered assuming you're in the US based on the terminology in your question. Please add a country tag. – BrenBarn Jan 12 '15 at 20:00
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    Note you would still need to pay some (employment) taxes (potentially) if you are a 1099 contractor, and those often would be filed with your 1040 - but they don't fall in the same domain as the quarterly estimated 1040 taxes. – Joe Jan 12 '15 at 22:04
  • @sunk818 I though 1040EZ didn't apply to people who are self employed or private contractors. Am I wrong about that? – fissidens Jan 12 '15 at 22:11
  • Schedule C EZ - irs.gov/pub/irs-pdf/f1040sce.pdf – Sun Jan 12 '15 at 22:13
  • @Joe Thanks, I'll still be filing my 1040 during tax season. Just didn't want to be penalized for not paying my quarterly. – fissidens Jan 12 '15 at 22:14
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IRS Publication 505 gives these guidelines:

In most cases, you must pay estimated tax for 2014 if both of the following apply.

  1. You expect to owe at least $1,000 in tax for 2014, after subtracting your withholding and refundable credits.

  2. You expect your withholding and refundable credits to be less than the smaller of:

    a. 90% of the tax to be shown on your 2014 tax return, or

    b. 100% of the tax shown on your 2013 tax return. Your 2013 tax return must cover all 12 months.

If you made so little money in 2014 that you will owe less than $1000 in tax, then according to those guidelines you won't need to pay estimated taxes.

  • Note you should make estimated payments covering both income tax and self-employment tax (currently 15.3%) on earned income that doesn't have withholding. For people in lower income tax brackets SE is the larger dollar amount. But at $2500 even SE is below the de-minimis exception to penalty. (You must pay the actual tax either way; the only difference is whether you make estimated payments or can wait until following April.) – dave_thompson_085 Jan 16 '15 at 21:43

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