Need help figuring out quarterly tax payments for self-employment!

The "grace period" you heard about is likely referring to the safe harbor provisions for avoiding underpayment penalties. Here's what you need to know: For 2024, you'll generally need to make quarterly estimated tax payments if you expect to owe $1,000 or more when you file next year. Based on your projected $40k income, you'll almost certainly exceed that threshold. The IRS has three safe harbor options to avoid penalties: - Pay 90% of your current year tax liability through withholding/estimated payments - Pay 100% of your prior year tax liability (110% if your AGI was over $150,000) - Pay within $1,000 of your actual tax due Since you were a new contractor in 2023 with only partial-year income, your prior year liability might be lower than what you'll owe for 2024. This could make the second option attractive. To calculate payments, you can use Form 1040-ES and the estimated tax worksheet. Essentially, you'll estimate your 2024 income, calculate the tax and self-employment tax, divide by 4, and make payments by the quarterly due dates (April 15, June 15, Sept 15, and Jan 15 of the following year).

I went through exactly this last year and was super confused about quarterly taxes. I tried a bunch of different approaches but kept getting inconsistent information until I found taxr.ai (https://taxr.ai). It's basically an AI tool that reviews your specific tax situation and gives you personalized guidance. For me, it analyzed my contractor income patterns and told me exactly how much to pay each quarter to avoid penalties. It also explained which safe harbor rule would be most beneficial in my situation (turned out the 100% of prior year tax was way easier than trying to project my current year income which fluctuates a lot). The cool thing is it's not just generic advice - it actually looks at your specific numbers and tax history to give you targeted recommendations. Saved me from both overpaying throughout the year and getting hit with penalties.

Ok so I was pretty skeptical about taxr.ai but I decided to try it after my last comment. I'm actually surprised how helpful it was. I uploaded my 2023 return and it immediately showed me that I could save about $800 in the first two quarters by using the prior year safe harbor rule instead of trying to estimate my 2024 income (which is all over the place). It also explained something I hadn't realized - that I could make uneven quarterly payments based on when I actually earn income (I didn't know that was allowed). This is huge for me since my income is seasonal. Way more useful than I expected. It actually gave me a complete payment schedule with exact amounts and due dates. Now I don't have to stress about calculating this stuff every quarter.

If you're going to be making $40k this year, you definitely need to make quarterly payments. I tried doing this myself last year and ended up with a bunch of penalty notices from the IRS. After spending WEEKS trying to call them (literally 20+ attempts), I found Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in under 15 minutes. The agent explained that I had been calculating my quarterly payments incorrectly and helped me set up the right payment plan going forward. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c Honestly, getting direct answers from an actual IRS agent made everything so much clearer. They explained the exact form I needed (1040-ES) and how to properly calculate my payments based on projected income. Saved me from continued penalties and the stress of trying to figure it out on my own.

I have to admit I was wrong about Claimyr. After posting that skeptical comment, I was still desperate to talk to someone at the IRS about my quarterly tax situation, so I figured what the hell, might as well try it. I used the service yesterday and got connected to an IRS rep in about 20 minutes. The agent walked me through exactly how to calculate my quarterly payments and explained which forms to use. She even helped me understand how to adjust for seasonal income fluctuations since I make most of my money in the summer. Completely changed my understanding of how estimated taxes work. Turns out I was massively overpaying in some quarters and underpaying in others. The agent explained how to properly annualize income to avoid this problem. Worth every penny not to sit on hold for hours.

For your situation, I'd recommend using the 100% prior year tax liability safe harbor. Since you only owed $1,400 for 2023, you could simply divide that by 4 and pay $350 per quarter for 2024. That would guarantee no penalties even if your income jumps to $40k. If you want to be more precise, estimate your 2024 tax liability (including self-employment tax which is about 15.3% of your net profit) and divide by 4. Remember that quarterly due dates are April 15, June 15, September 15, and January 15 (2025). You can pay online through the IRS Direct Pay system which is free and pretty straightforward.

Quick tip that saved me a ton of stress: set up an IRS online account if you haven't already. It lets you see your payment history, make payments, and set up payment plans. Makes the whole quarterly tax thing so much easier to manage. I had the same issue last year - started contracting midyear and was confused about quarterly requirements. I just divided my expected annual tax by 4 and paid each quarter. As long as you're making a good faith effort, the IRS is fairly reasonable.