If you are self-employed, a freelancer, contractor or entrepreneur...congratulations on being your own boss! Working for yourself looks a lot different than working for someone else, and it is important to keep in mind how your filing status is affected.
Unlike many employees who pay their taxes all at once on Tax Day (April 15), Quarterly Taxes are estimated tax payments to the IRS made throughout the year. These payments are based on an estimation of your income for the current tax year.
If your income is from a business or service, for example, working as an independent contractor, a social media influencer, freelance writing, driving for Uber, gardening, etc.; that type of income is self-employment income. Your self-employment income is reported on Schedule C or Schedule C-EZ, Profit or Loss from Business. However, you will be able to reduce the income you make by being able to claim business expenses, such as supplies, auto mileage, and cost of goods sold.
Traditional W-2 employees usually do not owe quarterly taxes because they are withheld from their pay. If taxes are not withheld from your pay (attention self-employers), you are responsible for paying the taxes on your own.
GETATAXLAWYER.COM can help advise you on industry-specific business deductions you may not know you are eligible for, saving you money on your taxes.
If you are self-employed, you most likely do not have taxes withheld from your pay throughout the year. Instead, you are expected to submit your estimated quarterly taxes if you anticipate owing $1,000 or more for your taxes.
If you make a late payment or skip a payment entirely, you may be subject to a late penalty. If your income is unsteady and fluctuates throughout the year, you may be able to use an annualized installment method during tax time to avoid a tax penalty.
The 2021 Quarterly Estimated tax deadlines are:
If the 15th falls on a weekend or a holiday, the due date is the next weekday. Don’t forget that the final fourth-quarter payment deadline for your 2021 taxes is January 18, 2022.
If your income varies from month-to-month, it's difficult to determine the exact amount of taxes to pay. Here are some tips to help you stay on track and stay on time with your filing.