Is it required to pay quarterly taxes on extra monthly income ($200.00 to $400.00) generated from a hobby?
Jeff W asked:
I know that taxes have to be paid on the extra income, but I was wondering if it could just be added as extra income at the end of the year?
TASHA
I know that taxes have to be paid on the extra income, but I was wondering if it could just be added as extra income at the end of the year?
TASHA
October 1st, 2008 at 4:31 am
Unless the hobby income generates additional taxes of $1,000 no estimated tax is required.
October 3rd, 2008 at 9:41 pm
If you owe less than $1,000 at tax time, you don’t need to make estimated payments. However you might want to tell your employer to withhold a bit extra to cover the tax liability so you don’t get hit with an unmanageable tax bill at tax time.
October 6th, 2008 at 7:16 pm
There are several things that could require you to pay taxes quarterly. If you’re going to owe under $1000 in taxes, you can just pay them at the end.
October 8th, 2008 at 3:29 am
For tax purposes, a hobby that makes a profit is called a business and the income and expenses are reported on Schedule C of Form 1040. If the $200-$400 is net income after expenses, you may have to pay estimated taxes in the future. But if you pay in at least as much as your prior year’s tax, there is no underestimate penalty and the tax is due at April 15. If you have income tax withheld at work, you may be able to just increase the amounts withheld from your pay to cover the extra tax from your little business.
Also, the profit from your business is subject to self-employment tax.