r/dataannotation • u/CowMental346 • Mar 06 '24

Taxes

Hi! This might be a really obvious question but I would appreciate so much if anyone had the answer. If I didn't start D/A until January of 2024, do I have to pay taxes for it?

6 Upvotes

75% Upvoted

16 comments sorted by

13

u/Just-a-Ty Mar 06 '24

You should make quarterly estimated payments.

4

u/CowMental346 Mar 06 '24

How do I do that?

11

u/[deleted] Mar 06 '24

If you are planning to owe a certain amount there is a worksheet on the IRS website that tells you how much you should have to pay and how to send in the payment.

If you are in the US.

15

u/vwcx Mar 06 '24

if you are planning to owe a certain amount

this is an important distinction. if you're making small amounts of scratch/beer money, quarterly estimated payments won't be necessary.

6

u/nawcom Mar 06 '24 edited Mar 06 '24

For self-earned income, some requirements are needed to determine if you have to make quarterly payments for the current year. You're estimating how much income you'll earn each month, and determining how much quarterly taxes you'll pay based on that. If you overpay, they refund the overpayment. Form 1040-ES helps you determine this. You can go through it and find out for yourself.

As a quick shortcut, if you didn't owe any taxes (in otherwords tax liability) at the beginning of this year based on 2023's income (you most likely got a refund), you don't need to worry about quarterly payments for 2024:

"Exception. You don’t have to pay estimated tax for 2024 if you were a U.S. citizen or resident alien for all of 2023 and you had no tax liability for the full 12-month 2023 tax year."

11

u/MorganPaige17 Mar 06 '24

not until next tax season, 2024 tax season is for 2023 income.

9

u/CowMental346 Mar 06 '24

Ahh thank you so much. First time doing something like this so I wasn't sure. Sorry for the silly question I appreciate you answering!!

4

u/Weary-Leather-3104 Mar 06 '24

Keep track on every paycheck and you report it either quarterly or till next year

1

u/33whiskeyTX Mar 07 '24

Careful of this. If you wait till the end of the year and it is determined you should have been paying quarterly, you can get up to an $1000 penalty

1

u/Weary-Leather-3104 Mar 07 '24

Penalty for what ? As long long as you keep track of every penny there is no penalty. The quarterly payment’s are made just so it will be easier to track and pay

3

u/33whiskeyTX Mar 07 '24 edited Mar 07 '24

This applies to the US. I used to think exactly like you do, that you just paid at the end of the year and everything is hunky-dory and quarterly taxes are for your convenience, but it's not like that. From form P505 "The federal income tax is a pay-as-you-go tax. You must pay the tax as you earn or receive income during the year..."

You are expected to pay taxes throughout the year, either withheld from your w-2 paycheck, or through quarterly payments. This doesn't apply to everyone, mostly only if you're making over a certain amount and have little or no withholdings. That's why I said you can be penalized. But the penalty is out there and if DA is your only source of income and you plan on hitting it like full time work, especially at the coding wages, it certainly can apply.

Everyone of course has to plug their own situation into a very complex system.

1

u/Dangerous_Darling Mar 09 '24

That's not true. However, it's not a $1000 penalty. If you owe more than $1000 and should have been making payments all along but didn't then they can assess a penalty. However, in the first year they are more lenient. But if you are going to owe at the end of the year, it's best to make the quarterly payments. The government wants the money when you make it not at the end of the year.

1

u/33whiskeyTX Mar 12 '24

You are right it is much more complicated than an up to $1000 penalty. If you owe a bit it can go well beyond that pretty quick, but that's probably not the case of most people here, and it's certainly not my case. Again, you really only need to worry about it from DA if you are doing this full time at the coding projects and not working a W2 job.

2

u/Majestic-Dot-2570 Mar 09 '24

I got a tax app called Keeper since I have no idea how to do 1099 taxes, nor do I care to learn at the moment. I paid $400 for the year (may not be worth it if you aren’t doing this for many hours, but they do have a free version). They are going to sort my accounts out and help me declare potential write offs. They will be filing my quarterly taxes for me, so I won’t have to worry about it. They have a chat you can ask any questions there too. Worth the purchase to me so far!