Perhaps you’ve taken the plunge into self-employment and added the luxury of being your own boss and working at your home office. Whether you’re working as a contractor or making money in the fast-growing sharing economy don’t forget you may need to pay estimated taxes and the upcoming final 4th quarter estimated tax deadline for 2016 is *January 17, 2017.
Are you prepared? If not, don’t worry. I have tips to help you.
Who is Subject to Estimated Taxes?
In the United States since we have a “pay as you go” tax system the government expects most of your taxes throughout the year. Employees have a certain amount of taxes automatically withheld from their paychecks.
On the other hand, if you are self-employed as a freelancer, contractor, or home-based entrepreneur you most likely don’t have taxes withheld from your pay throughout the year and are subject to estimated taxes. In general, you are expected to pay estimated taxes if you expect to owe $1,000 or more for your taxes.
When Are Estimated Taxes Due?
The good news is the IRS has a schedule to help you figure out when you need to pay.
Here’s the schedule for 2017 taxes:
- 1st Quarter (January 1 – March 31): April 18
- 2nd Quarter (April 1 – May 31): June 15
- 3rd Quarter (June 1- August 31): September 15
- 4th Quarter (September 1 – December 31): January 16, 2018
If the 15th falls on a weekend or a holiday, then the due date is the next weekday.
How Can I Figure Out My Estimated Taxes?
When you prepare your taxes at tax-time, TurboTax can automatically calculate your estimated tax payments and print out payment vouchers for you to send in to the IRS. You can also use TurboTax TaxCaster to get an estimate of your tax situation and see if you should make the final quarterly estimated tax payment for 2016 on January 17th.
If you use QuickBooks Self-Employed for your business, the program also does the math for you and helps you figure out your estimated taxes so you can easily make the estimated tax deadline. At the end of the year, QuickBooks Self-Employed gives you the ability to export your Schedule C information from QuickBooks Self-Employed to TurboTax to make your annual tax filing easier.
How Can I Pay Estimated Tax Payments?
Now that you know what you owe, it’s time to get your payment in. Fortunately, there are a few options:
- You can pay your taxes using the Electronic Federal Tax Payment System (EFTPS), which is the easiest way to pay your estimated taxes. Besides making instant payments, it’s also free.
- You can mail in your payment. The IRS has specific mailing addresses based on the state where you live. Please be aware that your payments should be postmarked by the due date to avoid penalties.
Tips on Making Your Quarterly Tax Payments Easier
- Forget filling out hand written forms. TurboTax can figure out and generate your estimated payment vouchers automatically when you prepare your taxes using TurboTax. If you use QuickBooks Self-Employed for your business, the program will also figure out your estimated taxes for you.
- Keep a record of all your estimated tax payments. You will need to enter estimated taxes you paid when you file your taxes.
Don’t worry about remembering all of this information. TurboTax Self-Employed has you covered and will help you uncover business expenses to help you save on your taxes.
Thoughts on Your Estimated Taxes
Do you pay quarterly estimated taxes? Do you have any additional tips for those just starting their own businesses?