Perhaps you’ve taken the plunge into self-employment and added the luxury of being your own boss and working at your home office in your PJs. Whether you’re working as a contractor or enjoying making money in the fast-growing sharing economy don’t forget you may need to pay estimated taxes and the upcoming 3rd quarter estimated tax deadline is September 15th.
Are you prepared? If not, don’t worry. I have tips to help you. 850-725-5696. www.VirtualBookkeepersUSA.com
Who is Subject to Estimated Taxes?In the United States since we have a “pay as you go” tax system 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 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:
How Can I Figure Out My Estimated Taxes?If you use QuickBooks Self-Employed for your business, 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 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.
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:
Do you pay quarterly estimated taxes? Do you have any additional tips for those just starting their own businesses? 850-725-5696
Individuals and corporations must pay estimated taxes on income that is not subject to withholding, which includes income from self-employment, interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Estimated taxes are paid in installments (usually quarterly) and if left unpaid, or paid late, you or your business will face interest and penalties.
2016 Due Dates for individuals and calendar year C corporations
Estimated Tax Payment Due dates:
Individual - Due Dates April 18th - June 15th - September 15th - January 17th, 2017
Federal C Corporations April 18th - June 15th - September 15th - December 15th
(25%)What forms report this information?
For individuals, Form 1040ES is where estimated taxes are reported and paid, and for C corporations, Form 1120W (generally paid electronically using the Federal EFTPS system)
Do the due dates change periodically?
Not exactly. The only reason the first estimated tax payment is due April 18th for individuals this year is because of Emancipation Day celebrated in the District of Columbia (falls on April 15th this year). Normally, the first individual due date would be April 15th, in line with the due date of form 1040. Similarly, fourth quarter payments are due January 17th this year because the 15th falls on a Sunday, and is followed by Martin Luther King Jr. Day on Monday, January 16th.
It is important to comply with your tax obligations; you do not want to be tacked with unwanted penalties that will affect your payments at the time of filing.
Questions on your estimated tax obligations or how to file?
Call us today for a free estimated tax vouchers Mike McVay, Accountant / 850-725-5696
McVay Business Services - Virtual Bookkeepers USA - www.VirtualBookkeepersUSA.com
Mike McVay, Tax Accountant Blog
Certified QuickBooks ProAdvisor & Licensed Tax Accountant Pensacola, FL
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