Paying Taxes Up Front?

I'm not a tax expert by any stretch of the imagination so I'm looking for some input on a few issues...

Let's say that I make $50,000 profit this year from affiliate programs. I'm worried that the government isn't going to be too happy about me paying all my taxes on that amount when I file next year. Isn't there some kind of penalty if you owe more than a certain amount?

Is anyone paying taxes up front to federal, state, or local?
If yes, how do you do it? Is there some form or something you should submit?

Thanks in advance for your help and advice!

While you should talk to an accountant, the regular rule is that they forgive you on your first year, just make sure to save enough to pay at the end of the year. But talk to an accountant, they make life easy, find one that doesn't charge you for asking questions.

Chet

Yes, definitely get an accountant. Basically, what you do is predict your income and pay the taxes on it each quarter. If you over pay that's ok, if you under pay by too much you get penalized. An accountant can set this up with the proper forms and the schedule.

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Definitely talk to an accountant, but the general rules are:

1) Your first year, you don't have to make quarterly estimated payments.
2) If you owe $1000 or less in taxes for the year, you don't have to make quarterly estimated payments.
3) To avoid a penalty, you have to pay at least 90% of what you end up owing this year or at least 100% of what you ended up owing last year (more if you're above $150k AGI) in your quarterly estimated payments.
4) Quarterly payments are due 4/15, 6/15, 9/15, and 1/15. It's not every three months. The second and third quarter payments are due a month earlier.
5) In addition to federal income taxes, these estimated payments should include your self-employment taxes (essentially both halves of the Social Security and Medicare taxes).

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Keep in mind these are non-corporation rules. For some more insight here is how I have to run my SubS corporation.

I am an employee of my consulting company. On the 1st and 15th I create a paycheck for myself. Quickbooks (everybody is using this right?) calculates all of my witholdings so it know what gross, taxes, and net are. I write a net out for the check and put it into my personal account.

Since the business has all of the tax money it (me) is responsible for paying taxes by the 15th of following month. Payroll taxes are due every month for me. I go to the IRS website and pay them online.

This is the first year I've made enough that my husband's payments on taxes through his job aren't enough to cover things, so I've done quarterly just so I don't have a huge lump sum at the end of the year. I'm definitely getting an accountant! It's a part of running my business I think makes much more sense to have someone else do so I can spend my time more profitably.

Wow! Thank you all for the wonderful insight! It looks like I won't have to make pre-payments this year because I received a refund last year.

For next year, I am considering just having my full-time job withhold extra tax money from paycheck to cover my affiliate earnings. This would probably be the easiest thing to do.

Thanks again!