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You can now:. See What's New for complete details. You're considered self-employed if you work as:. The IRS uses a pay-as-you-go income tax system, meaning you must pay your taxes as you earn income. It enforces this by charging penalties for underpayment if you haven't paid enough income taxes through withholding or making quarterly estimated payments.
It also charges penalties on late payments even if you get a refund. The tax code calls this last item the safe harbor rule. One exception applies for farmers and fishers who earn at least Paying your taxes quarterly can also avoid the cash crunch you might face come tax time. Paying in quarterly installments makes paying your bill far easier than one lump sum payment, especially if you've underestimated your taxes due.
As a self-employed individual, you file an annual return but usually pay estimated taxes every quarter. Quarterly taxes generally fall into two categories:. If you have significant changes in income or expenses during the year, that may impact the quarterly taxes you need to pay. For example:. You may have a chance to reduce your self-employment income further by claiming the qualified business income QBI deduction.
You can reduce the net amount of qualified items of income, gains, deductions, and losses tied to your trade or business. This means items like capital gains and losses, dividends, interest income, and other nonbusiness gains and losses don't figure into this calculation. You first must figure out your self-employment or business income using Schedule C and report your adjusted gross income on Form Each month, the requisite amount is transferred into a high-yield savings account.
Making quarterly payments is easy, thanks to the electronic system offered by the government. Just make sure you always have enough money in the account to cover what you owe. Miranda is a professional personal finance journalist and founded Planting Money Seeds. Did you see a change in your refund amount? Learn why the IRS makes changes to your tax refund based on credits and deductions from the tax experts at.
You can spread the total across each quarterly payment. Quarterly payments are usually due on the following dates. However, they get pushed back if they land on a weekend. These are the quarterly tax deadlines:. Save or link to this handy infographic for quick reference.
Estimated tax payments go towards your tax bill, which also can include self-employed tax. Independent contractors need to pay both the employee and employer portion of payroll taxes. Together, social security and medicare taxes add up to about The experts at Shared Economy Tax can help you with all of your quarterly tax needs.
We can help you estimate annual taxes and much more.
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