Self-Employed? Don’t Forget About the Estimated Tax Deadline

Self-Employed

The article below is up to date based on the latest tax laws. It is accurate for your 2018 taxes, which you will file by the April 2019 deadline. Learn more about tax reform here.

If you’ve taken the plunge into self-employment, congrats on being your own boss! Whether you’re working as a contractor or making money in the fast-growing sharing economy, don’t forget you may need to pay quarterly estimated taxes. The next next estimated tax deadline for tax year 2018 is *June 15, 2018.

Are you prepared? If not, don’t worry!

Who is Subject to Estimated Taxes?

In the United States, we have a “pay as you go” tax system. That means 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 quarterly estimated taxes. In general, you are expected to pay estimated taxes if you expect to owe $1,000 or more annually for your taxes.

For the 2018 tax year, now you can pay quarterly taxes by June 15, 2018; September 17, 2018; and January 15, 2019. If you missed the earlier estimated tax deadline for 2018 (April 18, 2018), you may want adjust your quarterly payments to reduce what you may owe at the end of the year. Remember, you don’t have to make your 2018 4th quarter payment due January 15, 2019, if you file your 2018 tax return by January 31, 2019, and pay the entire balance due with your return. However, if you skipped making a quarterly payment or pay late, you may be subject to a penalty.  If you earn your self-employment income unevenly during the year you may be able to use annualized installment method at tax time and avoid a tax penalty for not paying estimated taxes every quarter due to fluctuating income.

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 2018 taxes:

  • 1st Quarter (January 1 – March 31): April 18, 2018(This takes into account the one day extension to file taxes)
  • 2nd Quarter (April 1 – May 31): June 15, 2018
  • 3rd Quarter (June 1- August 31): September 17, 2018
  • 4th Quarter (September 1 – December 31): January 15, 2019

If the 15th falls on a weekend or a holiday, then the due date is the next weekday.

Don’t forget that the final fourth quarter payment for your 2018 taxes is January 15, 2019.

How Can I Figure Out My Estimated Taxes?

You can use QuickBooks Self-Employed to track your income, expenses, mileage, and figure out your estimated taxes year round. The program 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 Self-Employed to make your annual tax filing easier.

When you prepare your taxes at tax-time, TurboTax can also 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 an estimated tax payment.  TurboTax TaxCaster is updated to reflect the new Tax Reform Law passed the end of last year so estimates will take into account the new 20% qualified business income deduction provision in the new law.

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:

  • QuickBooks Self-Employed allows you to electronically file your quarterly estimated tax payments to the IRS. E-filing is fast and results in less errors because you won’t have to re-enter information into your checkbook or the IRS computer system.
  • You can pay your taxes using the Electronic Federal Tax Payment System (EFTPS), 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. When you use QuickBooks Self-Employed for your business, the program will figure out your estimated taxes for you. TurboTax can also figure out and generate your estimated payment vouchers automatically when you prepare your taxes using TurboTax.
  • 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.

Do you pay quarterly estimated taxes? Do you have any additional tips for those just starting their own businesses?

Comments (7) Leave your comment

  1. Lisa, do you have a program for retired people that need to pay estimated taxes. Income from social security and dividend and small pension and small rental income and farm rental income. Been using turbo tax and quicken for 15 years.

  2. If a person becomes self employed in the middle of the year, when are you required to make estimated tax payments? i.e. becomes self employed in July 2017…. is there a payment due September 15, 2017 or do file your taxes for 2017 as before and start estimated payments on April 15, 2018?

    1. Hi Kim,
      Whether you pay estimated taxes in September depends on how much taxes you expect to owe in 2017. If you expect to owe $1,000 or more for the year then you are expected to pay estimated taxes by the due date to avoid any underpayment penalty. QuickBooks Self-Employed will help you easily figure out your estimated taxes https://quickbooks.intuit.com/self-employed/
      Thank you,
      Lisa Greene-Lewis

  3. I need to know if I start a hobby/sole proprietor business not an LLC can I pay my taxes on a yearly basis? Please answer ASAP.Thanks.
    David P.Thobaben

  4. Goodmorning. I filed my fedreal return on January 7. I was accepted on January 11 2016. Will I be seeing a refund date to my netspend card anytime soon?

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