Paying estimated quarterly taxes four times a year may appear to be a hassle. You can lower your tax burden by paying your estimated tax bill before filing your taxes if you organise these quarterly payments correctly. This article will demonstrate how to pay taxes using examples to aid comprehension. If you need help with your taxes, you may use Tax Calculator Quarterly to get started right now.
What are estimated tax payments?
If you're self-employed, you'll most likely be required to pay your taxes in four instalments rather than one lump sum each year. It's "estimated" because you're guessing how much money you'll make this year and paying taxes on that amount.
Is it necessary to make estimated tax payments?
Plan on filing as a solo proprietor, a partnership, a corporate shareholder, or a self-employed person. If you owe $1,000 or more in taxes, you'll almost probably have to make quarterly tax payments. Estimated tax payments are normally required if a company anticipates to owe $500 or more in taxes for the current year. If you meet these IRS minimums, you'll have to file quarterly estimated taxes using Tax Calculator Quarterly.
You don't have to pay the estimated taxes if:
You have a job: If you're an employee, your employer should handle your tax withholding on a quarterly basis. However, they are prone to making errors, so fill out Form W-4 and present it to your employer to ensure that the exact amount is deducted. You will not be obliged to pay projected quarterly taxes if you meet all three of the following criteria:
You owed no taxes in the preceding tax year and were not required to file an income tax return.
For the whole year, you were a US citizen or resident. Your tax year lasted a year and a half.
If you don't meet all of the above criteria for nonpayment, you're among the millions of Americans who must pay estimated quarterly taxes—keep reading!
How to calculate estimated taxes
To calculate your projected taxes, double your current year's total tax burden by four. Self-employment tax, individual income tax, and any other taxes are included.
Individual filers can use the IRS' Estimated Tax Worksheet, which is included in Form 1040-ES, to calculate their estimated taxes, while businesses use Form 1120-W. The spreadsheet will walk you through these calculations step by step and provide payment vouchers.
Getting ahead of your quarterly tax deadlines
Tax deadlines sometimes sneak up on you, leaving you unprepared to make a large IRS payment. At the start of the tax year, the law provides small businesses with quarterly tax vouchers for the next year, so you're never left guessing how much you'll owe. Learn more about FlyFin's small business tax services, which include quarterly tax assistance and annual filing.
How to make estimated tax payments
Fill up Form 1040-ES and mail it to the IRS along with a check or money order. You can also pay by credit card online or over the phone through the IRS Payments Gateway. For corporations, payments must be made through the Electronic Federal Tax Payment System.
Comments