Everyone is required to pay taxes on the income they received during the year. But if you’re a business owner, independent contractor, self-employed, or receive income from other sources, the IRS requires you to pay quarterly estimated tax payments throughout the year. Read along to find out tips for paying estimated taxes.
What Are Estimated Tax Payments?
Estimated tax payments are a way to pay tax on income that is not subject to withholding tax. The IRS requires you to pay four quarterly installments, and if you underpay your payments, you will have to pay more when you file your tax return. Each payment has a specific deadline, and the four installments must be made on:
- April 15
- June 15
- September 15
- January 15
How to Make Estimated Tax Payments
If you’re not sure how to determine how much you need to pay, the IRS Form 1040-ES is used to calculate and pay estimated tax payments. Another way to get an idea of what you will owe each year is by looking at your income, deductions, credits, and liability. The IRS allows you to paid your estimated tax payments with a credit card or debit card. These payments can be made online or over the phone.
Pay On Time
Make sure you’re paying on time, and if you’re missing any of your quarterly estimated tax payments, you can be hit with costly penalties and interest fees. If you’ve missed any of the installments, pay them off as soon as possible or before the end of the fourth quarterly payment.
Hire an Accountant
Hiring a CPA to help you make your quarterly estimated tax payments is the best decision you can make for your business. They will make sure all your forms are in order and submit your payments on time and correctly.
Being a business owner is already stressful on its own, and having to keep up with estimated tax payments can be complicated and frustrating. Hiring experienced accountants from Calabrese & Associates, P.C., to assist with making tax payments will help you focus all your time and energy on your business operations. Visit our website today to get started!