Paying Your Taxes

Paying Your Taxes

Other taxes that you might have to pay

How to increase your take-home pay if you had a refund

Estimated payments and penalties for underwithholding

Other taxes that you might have to pay

Self-employment tax

May have to pay if you file a Schedule C

For payment of Social Security and Medicare taxes

You pay both employee's and employer's tax for a total of 15.3 percent of net earnings

Alternative minimum tax

Very complex part of tax law

Attempts to levy taxes on those who might otherwise escape taxation through tax shelters

You may have to pay this tax if you file Schedule C, D, E or F and your total income is more that $34,000 (single) or $45,000 (married filing jointly)

How to increase your take-home pay if you had a refund

Why you don't want a refund

A refund is an interest-free loan to the government

The average refund is around $1,200

About 75 percent of taxpayers get refunds

If you received a refund of $1,000 or more you should be able to safely increase your take-home pay by adding one allowance to your W-4 withholding allowances

Use worksheet on back of W-4 to double-check yourself

Estimated payments and penalties for underwithholding

The government wants as much of your money as soon as possible

Before 1943 there was no withholding

To avoid underwithholding penalties

• Prepay (or have withheld) 100 percent of last year's tax liability
• Or prepay 90 percent of this year's tax liability
• High income taxpayers face stricter criteria

Quarterly payments

Most workers have incomes taxes withheld from their wages, so they don't have to worry about payments

But if you're self-employed, receive alimony or are retired, you may have to make quarterly payments

Use form 1040-ES

Make payments by

• April 15
• June 15
• September 15
• January 15

  Note that not all payments are three months apart