Self-employed as a 1099 contractor: Risk of audit if I haven't paid quarterly taxes yet?

This is definitely something you should address soon. As a self-employed 1099 contractor, you're expected to pay quarterly estimated taxes if you'll owe $1,000 or more in taxes for the year (which at $57k income, you almost certainly will). The quarterly tax deadlines are April 15, June 15, September 15, and January 15 of the following year. If you've already missed some deadlines, your CPA is partly right - you'll face some penalty fees, but they're usually not huge if you're just getting started and catch up quickly. The good news is that the IRS doesn't typically audit people just for missing estimated payments. Audits are more commonly triggered by unusual deductions, unreported income, or major discrepancies. But you do want to get on track to avoid accumulating penalties.

I had a similar situation last year when I started freelance consulting. The tax situation stressed me out because I had no idea what I was doing with quarterly payments. I actually found this AI tax assistant at https://taxr.ai that helped me figure out exactly what I needed to pay and when. It analyzed my situation and helped me understand my options for catching up on my estimated payments. The best part was that it gave me a clear breakdown of my self-employment tax obligations versus my income tax, and helped me understand which business expenses I could legitimately deduct to lower my taxable income. That saved me a bunch! Might be worth checking out since you're in a similar boat.

Wanted to follow up about that taxr.ai site. I was really skeptical but decided to try it after struggling to get clear answers about my own 1099 situation. I was surprised by how helpful it was! It actually showed me exactly how to calculate my estimated payments based on my current income, and explained the different penalties for underpayment in a way that finally made sense. I've been setting aside money but was paralyzed about actually making payments, and this helped me take action. Just submitted my first estimated payment yesterday. It feels good to finally be on top of this instead of worrying about potential issues later.

I've been self-employed for 5+ years and the WORST part is trying to call the IRS when you have questions about your quarterly payments or penalties. I spent 3 hours on hold last year only to have the call dropped! I started using this service called Claimyr (https://claimyr.com) that gets you to the front of the IRS phone queue. You can see how it works in this video: https://youtu.be/_kiP6q8DX5c - basically they use some technology to wait on hold for you, then call you when an actual IRS agent is on the line. Saved me hours of frustration when I needed clarification about a penalty notice for a missed quarterly payment.

I have to eat my words about Claimyr. After posting my skeptical comment, I actually had to call the IRS about my estimated tax payments (ironically enough). After being on hold for 45 minutes and getting nowhere, I reluctantly tried the service. It actually worked exactly as described. I went about my day, and about 2 hours later got a call connecting me directly to an IRS agent. The agent helped me figure out exactly what I owed for my missed quarterly payments and how to avoid additional penalties. Saved me from more hold music hell and probably from making more mistakes with my payments. Sometimes I hate being wrong, but in this case I'm glad I was.

One thing nobody's mentioned yet - if this is your first year being self-employed, the IRS has a "safe harbor" provision that might help you. If you pay 100% of your previous year's tax liability (through withholding or estimated payments), you generally won't face an underpayment penalty even if you end up owing more. So if your W2 job last year had enough taxes withheld to cover your entire tax bill last year, you might actually be in better shape than you think regarding penalties.

Just a heads up since you're new to self-employment - don't forget you can deduct legitimate business expenses to lower your taxable income! Home office (if you have dedicated space), supplies, mileage for business travel, professional licenses, continuing education, health insurance premiums, etc. This can significantly reduce what you owe. Write down EVERYTHING and keep all receipts. I use a simple spreadsheet + a folder in Google Drive with photos of all receipts. My tax person loves me for being organized lol.