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 estimated taxes. The upcoming third quarter estimated tax deadline for tax year 2018 is *September 15, 2017.
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 estimated taxes. In general, you are expected to pay estimated taxes if you expect to owe $1,000 or more annually 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 2018 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.
Additionally, Victims of Hurricane Harvey that took place in parts of Texas and Hurricane Irma that took place in the U.S.Virgin Islands, Commonwealth of Puerto Rico and parts of Florida may qualify for relief which includes an extension of time to pay estimated taxes until January 31, 2018.
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.
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 a 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?