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Thread: question re: decreased earnings and estimated taxes

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    Default question re: decreased earnings and estimated taxes

    I'll try to make a long-ish story short. Last year I made $20k. (Before you all gasp in horror or assume I'm lying...I only work very sporadically due to severe depression/anxiety issues.)

    This year...I pretty much had a total breakdown. I only worked 3 months out of the year, and made a grand total of $7k all year.

    I haven't made any of my estimated tax payments for 2008. (Earnings: $7k, estimated tax total: almost $5k. You do the math. )

    So what am I supposed to do about filing my taxes for 2008? Just file my taxes and put 0 for "estimated taxes paid in 2008"? Should I somehow notify the IRS that I was unemployed for 3/4 of the year? If so, how should I do that? Will I get in trouble for not filing my estimated taxes? Will they assume I'm lying when they see such a drastic decrease in earnings from last year to this year? If so, any proactive advice on dealing with that?

    I'm not that worried about an audit, b/c I've got nothing to hide. I'm living with relatives until I can get back on my feet, and I have no car payments or tuition or savings or big purchases or anything else that would cause the IRS to think I'm under-reporting my income. But I am still a little worried; I just want to do everything exactly the right way when I file taxes, b/c the last thing I need right now is another problem in my life. Help?

    I did just start a regular job last week, with a paycheck and W-2 and all that. So I'm also confused about how to file my self-employment earnings from dancing along with the W-2 that I'll get from my current job.

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    Default Re: question re: decreased earnings and estimated taxes

    at a total annual income level of $7k, you really don't have much to worry about. Because of progressive tax rates, you'll owe next to nothing in the way of income taxes on this amount.

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