Fed/S/S tax witholding

At age 70 1/2 I've decided to start an independent consulting business out of our home. My wife and I both receive S/S income plus now start mandatory withdrawls from IRA. My consulting business will generate about $15K-$20K additional income in"08 with no witholding taken out for taxes and S/S. What is the best way to deal with the issue of taxes due on income received? I think I probably have to file quarterly estimates with the Fed on the new consulting income? Thanks for your feedback.

ViperII,

There are 3 safe harbors you can use before you need to make estimated payments.
1) Will you owe $1,000 or more for 2008 after subtracting income tax withholding and credits from your total tax? If no, estimated payments are not required.
2) Will your income tax withholding plus credits be at least 90% of the tax shown on your 2008 tax retrun? If yes, estimated payment are not required.
3) Will your income tax withholding and credits be at least 100% of the tax shown on your 2007 tax return? If yes, estimated payment are not required.

You can adjust your withholding from your SS, or from your RMD if you take quarterly distributions to meet condition number 3 above. The withholding must be occurring regularly throughout the year, or when you have income (from your business), to avoid a penalty.

In future years it may be best to make the quarterly estimated payments as your consulting generates income.

Clydewolf- thanks for the prompt response-I appreciate it!