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Video instructions and help with filling out and completing Form 1040-EZ vs. Form 1040-es-nr

Instructions and Help about Form 1040-EZ vs. Form 1040-es-nr

Hi, my name is Bond, James Bond, but friends call me 007. I am a self-employed spy, and last year I made one hundred thousand dollars in gross income. So, this year, I'm filing single and I want to walk you through my Form 1040 ES, giving you step-by-step instructions on how to fill out your own Form 1040 ES. Let's jump right into it. One thing I want to say here is that when you file Form 1040 ES, you need to understand the background behind it. Everybody knows that income tax is a pay-as-you-go system, right? So, if you are an employee, you pay federal withholding as part of every paycheck, whether it's every two weeks, every month, or every week. But if you are self-employed, what happens? You might have to make quarterly estimated tax payments towards the amount that you expect to owe the IRS. Otherwise, you might face an underpayment penalty. Nobody wants that, right? These payments should include both your income and self-employment taxes and are reported via Form 1040 ES. For self-employment taxes, there are two types: social security and Medicare. Your social security tax rate is 12.4% and your Medicare tax rate is 2.9%. When you work for a company, your employer pays a portion of these taxes, and you pay the other portion. But if you are self-employed, you have to pay the full amount yourself. If you are self-employed as a sole proprietorship, an independent contractor, or a freelancer, and you earn more than $400, you may need to pay self-employment tax. This is important to note, even if you are paid in cash and don't receive a 1099 miscellaneous form. The IRS cares about your revenue, not the method of payment. Keep in mind that you may be able to offset...