Estimated tax question

[ainpie-10]

So this is my first time to do taxes with my eBay stores. I have 2 and I’ve received 1 1099. I’m sure I can find a way to pull up my other stores through my seller hub, but my question is was I supposed to do estimated payments during this year? My father is an accountant and is mad that I didn’t make any estimated payments during the year. Since 2021 was my first year selling with my stores I honestly didn’t know about making estimated taxes. I just assumed I’d be filing during tax time. So do y’all make estimated payments during the year? Will I be penalized for not doing it?

[lepke1979]

Without knowing if you've filed as a business/1099 before or if you normally work a W2 job. You're probably fine.

If I recall, the first year, estimated is more of a recommendation and won't penalize you if you didn't do it. Next year is when it can happen and you're expected to at least pay how you did the prior year I think. Even then, the penalty isn't that bad. Your dad might be more mad that you have to cut a single big check vs smaller ones each quarter. If you normally have a W2 type job where you're paying in over the course of a year, you may have already overpaid so the ainpie-10 business will just take from that assuming you're sole prop or single member LLC.

[lepke1979]

OK, looking into it, I was mistaken on the first year thing. But you're still probably fine if you had a regular job while doing this. And I occasionally do estimated. I work a W2 job and get a lot of credits because of the kids and whatnot. So don't usually see the need. If or when I get to where I sell a lot more than I do now, I will start doing it quarterly though.

Penalty for Underpayment of Estimated Tax

If you didn’t pay enough tax throughout the year, either through withholding or by making estimated tax payments, you may have to pay a penalty for underpayment of estimated tax. Generally, most taxpayers will avoid this penalty if they owe less than $1,000 in tax after subtracting their withholdings and credits, or if they paid at least 90% of the tax for the current year, or 100% of the tax shown on the return for the prior year, whichever is smaller.

[dnasilver]

You might want to look up FICA taxes and see the impacts. Depending on how much business you did, you might want to invest in a CPA this year.