Self Employed? Here’s What You Need to Know About Quarterly Taxes for Self-Employed Individuals

Taxes don’t just happen once a year in April if you are self-employed. Instead, they happen throughout the year. Staying on top of payments is key to avoid penalties and keep your business running smoothly. 

Whether you’re a gig worker, small business owner, or freelancer – here’s everything you need to know about quarterly taxes for self-employed individuals and businesses. 

Who Needs to Pay Quarterly Taxes?

There are several instances when you need to pay estimated taxes. For example, if you anticipate owing at least $1,000 in taxes for the year after withholdings and credits, then you likely need to pay quarterly taxes. 

Other circumstances where you are on the hook for quarterly taxes are if you received income that wasn’t withheld, such as from a small business, contract job, or freelance work, and if you have income that generates a tax reliability (such as investment, rental, etc.).

Why Are Quarterly Taxes Necessary?

Unlike when you work for an employer, self employed individuals are responsible for paying their own income and self-employment tax. Instead of paying everything at the end of the year, the IRS requires that you pay estimated taxes in quarterly installments throughout the year. 

Self-Employment Tax Rate

Calculating what you owe doesn’t have to be overwhelming. Figuring out your quarterly payments involves estimating your total income, credits for the year, and potential deductions. From there, you divide the projected bill by four. 

The IRS Form 1040-ES is a great resource to calculate your estimated tax, as it helps you account for self-employment tax, income tax, and any other applicable deductions.  

If your income fluctuates throughout the year then you can also adjust your estimates as you go. 

How to Pay Quarterly Taxes

Following self-employed tax deadlines is crucial to ensure that you never miss a payment and don’t get hit with penalties further down the road. 

Important Deadlines to Remember

These are the quarterly tax deadlines that you need to be aware of:

April 15th: for income earned between January and March

June 15th: for income earned between April and May

September 15th: for income earned between June and August

January 15th: for income earned between September and December

Where Do You Pay?

You have several options with ways to pay. You can go online and do it directly through the IRS Direct Pay system, via the Electronic Federal Tax Payment System, by check or money order, or with the help of an accountant.

What Are the Penalties If You Don’t Pay?

Not paying or underpaying your quarterly taxes can result in penalties and interest. Doing so could leave you in a bad situation come annual tax season when you discover that you owe much more than you realized.

Contact a Professional Accountant for Quarterly Tax Guidance

There’s no reason to navigate the confusing tax landscape on your own. When you work with a tax professional, you have peace of mind that your taxes have been handled accurately. They will also provide you with self-employed tax tips and help you understand the self-employed tax deadlines. 

Trust SD Associates, P.C. for Self-Employed Tax Tips and Quarterly Tax Advice

At SD Associates, P.C., we know everything there is to know about 1099 income taxes. From guiding you through tax deductions for freelancers to helping you fill out a Schedule C tax form, we are here to make the process as smooth and stress-free as possible. 

Call today to set up your quarterly tax payments with SD Associates, P.C. today!