A Closer look at withholding versus quarterly payments

I was scheduled to make a tax payment to the IRS for the first 3 months of self employed income. Should I still make it?   Because now I have a regular deduction taking out from my paycheck.   I figure based on adding my income up for self employed and regular I would get a refund back at the end of the year of an amount greater than what my quarterly tax payment should have been. So I think I have two choices 1) pay the quarterly tax bill and then adjust my withholding on my check or 2) don't pay the quarterly and don't adjust my withholding. What is the correct thing to do? M.T.(via e-mail)

Although technically you owed the money for the first three months of the year during which you were self-employed, it sounds as if you have things well under control now that you have withholding from your new job. As long as your withholding is high enough to cover all of your income for the entire year, you can dispense with the quarterly payment.

The IRS considers withholding to be taken evenly throughout the year, even if the withholding didn’t occur for a full twelve months. So there will be no penalty for underpayment as long as your withholding covers all of the tax you owe.

I would recommend assessing your tax situation sometime during the last three months of the year and recalculating your projected withholding for the rest of the year to make extra sure that you are covered. If it turns out your withholding is not high enough to cover the tax for the entire year, you may find yourself in a penalty situation due to the income you earned in the first quarter.

To avoid a penalty, if it looks like you will have underpaid your tax as the end of the year approaches, you can ask your employer to adjust your withholding for the last few paychecks, increasing the amount withheld so that your taxes for the year will be covered.

When you calculate your tax for the first quarter, when you were working as a self-employed person, make sure you calculate not just income tax but also the self-employment tax. Self-employment tax is 15.3% of your net business income. After you calculate the self-employment tax, you are allowed a deduction of one-half of the self-employment tax you owe. This deduction doesn’t go on your business schedule but on page one of your tax return.

My daughter's French class went on a trip to Paris during their Spring Break.  I was asked to chaperone the group as well.  My question is, can I deduct the cost of one or both of the trips?  Expenses included airfare, tour costs, meals, airport transportation, and incidentals. There were several planning meetings and meeting host related expenses as well.  Since my daughter is still a minor (full exemption to which I provide 100% of the support for) I assume that her expenses are deductible. D.T. (via e-mail)

You are allowed a charitable deduction for the costs you incurred for your portion of the trip because you were donating your services to a qualified charitable organization. You get no deduction for the value of your services, even if you provided guidance or teaching to the students, but your actual expenses are deductible.

If you extended the trip and stayed on after the students went home to enjoy some personal vacation time, that portion of your expenses would not be allowed as a deduction.

Your daughter’s expenses, unfortunately, do not qualify as a deductible expense. Even though your daughter is a minor and your dependent, expenses such as these do not generally qualify as a deduction.