Q. I will be receiving a 1099 this year and I would like to know how much we should hold out of our cash receipts for taxes. We are collecting money on a weekly basis. Also, how often should I pay these taxes and where can I get more information about what forms to use?

A: It is difficult to determine the exact amount of an estimated tax payment without having a little more information regarding specific facts and circumstances. By definition, estimated taxes should reflect your family's expected tax liability. That tax liability will depend on a great many things such as how much money the family makes, do you itemize deductions, do you own a home, do you have children, what business expenses do you incur, etc.

The best way to determine how much your estimated tax payments should be is to prepare a comprehensive tax estimate. Try to determine how much money you will earn for the year, what deductions and other expenses you might have and estimate the tax liability for the year. This is kind of like preparing a tax return for the year based on estimated numbers. After you have completed the estimate, then your estimated tax payments should be structured so that you have paid enough in estimated tax payments to avoid any underpayment penalties that the IRS might impose. Don't forget any withholding payments that may be generated from another employee job where the employer withholds taxes and sends them to the government. Also don't forget that as a self-employed individual, you will be responsible for self-employment tax as well.

Estimated taxes are typically paid on a quarterly basis with one payment due April 15th, the second on June 15th, the third on September 15th, and the fourth on January 15th. (The fourth quarter estimated tax payment is due on January 15th of the following year.)

The IRS had some good publications to help you with this information. One is called Publication 505, Tax Withholding and Estimated Tax. Another is Publication 533, Self Employment Tax. You can download the publications from the IRS for free at their Web site.

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