How to File Your Taxes Quarterly If You Are Self-Employed

If you’re self-employed or work as an independent contractor, a sole proprietor or a freelancer, you’ll need to file an annual tax return, and make estimated payments each quarter.

Generally, you need to pay your quarterly taxes on the 15th day of April, June, September and January. If one of these dates falls on holiday or weekend, however, you’ll need to file your taxes before the next business day. To avoid paying a penalty fee, make sure to pay your estimated taxes before the due date.

When you pay your estimated taxes, you’ll be paying self-employment tax and income tax. When you work for yourself, the Internal Revenue Service (IRS) requires you to pay self-employment tax, as this acts as a Medicare and Social Security tax, similar to the type of tax you would have withheld from your paycheck if you worked an employer. To learn more about filing your quarterly taxes, review the information below.

When to Pay Your Estimated Taxes

When you work for yourself, you need to fulfill your self-employment tax obligations by submitting estimated quarterly payments to the IRS. You generally need to do so if you expect to pay at least $1,000 in taxes for that year. To meet these obligations, you must submit your estimated tax payments in four separate installments throughout the year. For instance:

  • In April, you’ll pay tax on the income you earned from January 1st through March 31st.
  • In June, you’ll pay tax on the income you earned from April 1st through May 31st.
  • In September, you’ll pay tax on your earned income from June 1st through August 31st.
  • In January, you’ll pay tax on any income earned from September 1st through December 31st.

In addition to making these quarterly payments, you must also file an annual tax return if your net earnings for the year were at least $400, or you meet any other conditions that would require you to do so. To learn more about these conditions, refer to Chart C under the IRS’ 1040 filing instructions.

If you file your annual tax return and pay your taxes by February 1st, however, you generally do not need to make the final estimated payment in January. When you file your annual tax return, you’ll pay your fourth quarter taxes and any remaining tax balance you may have missed earlier in the year.

How to Estimate Your Quarterly Tax Amount

As an independent contractor, freelancer or self-employed worker, you need to pay income tax for any earned revenue from that year, as well as self-employment tax. For those with net incomes of up to $127,200, for instance, the self-employment tax rate was 15.3 percent in 2017 (or 2.9 percent in Medicare tax and 12.4 percent in Social Security tax). To calculate your taxable income, you must take your total revenue for the year (gross income) and subtract any deductions or expenses from that amount. Then, you’ll use this amount to calculate your estimated tax payments for the current year.

To easily calculate your taxable income and estimated tax payments, use the worksheet found under IRS Form 1040-ES. To assist you in completing the form, refer to your annual tax form from the previous year. Once you’ve estimated the amount of tax you owe for the year, divide the amount by four. Then, pay that amount each quarter before the IRS’ filing due date. If your income fluctuates throughout the year, however, you may need to adjust your payments accordingly.

For added convenience, consider the benefits of purchasing QuickBooks Self-Employed. With QuickBooks Self-Employed, you can sync your bank accounts and create “rules” to track your income and any tax deductions you may have. Then, QuickBooks calculates your estimated tax amount and reminds you of when your payment is almost due. If you plan to pay by mail, it’ll even tell you when you need to have your payment voucher postmarked by. Plus, you pay just $5 per month for the first three months and $10 for any subsequent months. If you upgrade to the QuickBooks Tax Bundle, you can submit your payment directly through your account, rather than paying the IRS online, by mail or via telephone.

How to Pay Your Quarterly Taxes

Once you calculate your quarterly tax amount, you may submit your IRS payment online, by mail or by telephone. After you pay your quarterly taxes, keep a record of the date you submitted your payment, as well as the amount you paid. You’ll need this information when you file your annual tax return. To explore the specific process of filing your estimated tax payments, review the following methods.

Online

To easily pay your quarterly tax payments online, visit the Payments section of the IRS’ website. Then, pay with a credit or debit card, bank account or by Electronic Fund Withdrawal (EFW). If you can’t pay the tax amount upfront, you may apply for an Online Payment Agreement if you wish to pay in monthly installments. When paying with a bank account, for instance, you must provide the following information:

  • The reason for your payment (such as estimated tax)
  • A previous tax year (for verification purposes)
  • Your filing status
  • Your first and last name, Social Security Number, birthdate and address
  • Your banking information

After completing the transaction, print the confirmation page or save it to your computer. You may also request to receive a confirmation by email.

By Mail

To pay your quarterly taxes by mail, simply download and print a copy of IRS Form 1040-ES, and complete the payment vouchers that can be found on the last few pages. When paying your 2018 estimated tax, for instance, you must:

  • Complete payment voucher four for payments due on January 15th.
  • Complete payment voucher three for payments due on September 17th.
  • Complete payment voucher two for payments due on June 15th.
  • Complete payment voucher one for payments due on April 17th.

After completing the appropriate voucher, mail the IRS a check or money order made payable to the United States Treasury. However, your check or money order must also include your Social Security Number and “[Current Year] Form 1040-ES”. Then, refer to your 1040-ES Form for specific mailing instructions, as the mailing address varies depending on the state in which you live.

By Telephone

As another option, you may pay your quarterly taxes by telephone. However, you must provide your credit or debit card payment information when doing so. To pay by telephone, you may call one of the following IRS service providers:

  • Official Payments at 1-888-872-9829
  • Link2Gov Corporation at 1-888-729-1040
  • WorldPay US, Inc. at 1-844-PAY-TAX-8T

Related Article: What You Should Know About Social Security Retirement

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