What you need to know about quarterly taxes

Quarterly taxes mostly apply to people who own their business including landlords and investors. As a home business owner, you will need to make estimated tax payments at least four times a year. This is because you are not withholding enough from your business earnings to pay the federal income tax in full at the end of the year.

The IRS usually demands to be paid quickly and as soon as possible. They definitely don't have the patience to wait until April 15th of the following year to get their hands on your hard earned money. In fact, most people overpay their taxes throughout the year and the IRS doesn't seem to mind. They will eventually pay you for the excess amount you paid them, and of course, without interest. The government wants to make sure that it's getting its share of the profits sooner than later and not next year. They want to get their hands on what you owe them after you take in consideration all your other deductions as soon as possible. This is why you need to make quarterly tax payments.

What you can to do to keep track of all your earnings and losses is to hire someone with accounting knowledge and who has the appropriate skills specifically to help you in the type of business you run. This accountant can help you stay organized with your earnings and spending and will estimate how much you need to give the government every quarter during the year. The IRS has the full right to charge you penalties for not following regulations on how to pay your taxes if you are the sole business owner. Once you have estimated how much you're going to owe over the year, you can simply divide that amount four and start making payments to the IRS. As you see, you will make your payments at least every three months. This means you will send your payments on April 15th, July 15th, October 15th and January 15th.

If your business is strong and stable, you may consider looking at your most recent tax return meaning from the previous year. Use the same amount you paid the IRS every three months from the year before and basically keep the sending the same payments for the coming year. If you happen to fall short, don't worry too much about it. Just pay the penalties. If you send more than you owe, the IRS will eventually send back the excess money. If you expect your income to increase or to decrease significantly, you could slightly change your estimated tax calculation using your new projected total income. As a self-employed person, remember to estimate both your regular income tax and your self-employment tax. Mail your estimated tax payment to the IRS service center as soon as you can.

Paying the IRS four times a year can be very stressful for anyone and especially for the small business owner. If you are running a small business or are a landlord or investor, make sure that you hire someone with skills to help you figure your taxes out before the end of the year. Hire someone that has the expertise in the type of business you have and someone that understands your accounting and can estimate approximately what you owe the IRS every three months. You can decide to make payments to an account every month and send a check for the amounts accumulated in that account quarterly. Make sure that you understand and follow the guidelines of paying taxes quarterly to the IRS to avoid paying heavy penalties.