|
|
The facts about quarterly taxes
April 15th is the date that most people think of when they think of taxes. They worry about getting all of their tax information together and filed by then. What many people do not know if that they may need to pay quarterly taxes.
Quarterly taxes are just that.taxes that are paid quarterly. Meaning that instead of paying your taxes once a year, as the rest of the US does, you must pay once every four months. How do you know if you are required to pay quarterly taxes? That is a good question, and I am sure you have even more questions about quarterly taxes, and so, take a look at the facts about quarterly taxes.
|
|
The facts about quarterly taxes are simple:
- If you're a sole proprietor the federal government requires you to pay income taxes each quarter.
- All sole proprietors must send estimated tax payments to the IRS four times a year.
- If you don't pay your taxes quarterly and you are self-employed, then the government may charge you interest and impose nonpayment penalties for anything unpaid, this is pretty much if you owe more than $1000 for the year, or in other words, in most cases, if you make more than $3000.
- If you earn income in a given quarter, you owe tax for that quarter, and should pay it on or before the due dates.
- To estimate what you must pay quarterly the government recommends that you look at what you owed last year, and divide that amount by 4 to pay it each quarter. Tax laws change, so if you do not know what your estimated payment should be consult a tax professional.
- IRS Publication 505: Tax Withholding and Estimated Tax, contains detailed information on estimated taxes and a worksheet to help you figure out how much your estimated payments should be. Use it!
- Quarterly taxes are to be paid by April 15, June 15, September 15, and January 15. When these dates fall on Saturdays, Sundays or legal holidays the payment is due the next business day.
- To file quarterly taxes you use IRS Form 1040-ES.
- Once you start paying your taxes quarterly the IRS will set up an account for you and send you preprinted 1040-ES forms and payment vouchers.
- To get more facts about quarterly taxes visit the IRS website or call the IRS direct at (800) 829-1040.
Just to clarify, sole-proprietor means you are self-employed or own an unincorporated business. So if you work as contracted labor, work for hire, etc. and taxes are not being taken out of your pay by the company paying you, or if you make money in your business and you are not paying taxes on it then you fall under the umbrella of needing to pay quarterly taxes.
Many people who are self employed have enough write offs that they do not end up owing too much in taxes. However, the amount owed can increase significantly if you throw in fees for late payment or underpayment, penalties, etc. To be on the safer side, over-estimate your payment and get a return rather than underestimate and get penalized for it. While it stinks, and takes more work, you would be smart to know that you must pay quarterly, and try not to avoid doing so. You still only file once a year, but you send payments in at least 4 times.
Privacy Policy, Terms of Use