Estimated taxes are payments you make to the Internal Revenue Service (IRS) on income that isn’t automatically taxed, like self-employment income, interest, or rental income.
If you’re self-employed, taxes usually aren’t withheld from your earnings, so you’re responsible for paying them throughout the year.
Why do self-employed people need to make estimated tax payments?
Unlike employees who have taxes taken out of each paycheck, self-employed people need to estimate how much tax they’ll owe and pay it themselves.
Making estimated tax payments helps ensure your taxes are considered paid on time when you file your return.
When are estimated taxes due?
Estimated tax payments are typically due four times a year:
April
June
September
January
These payments cover income earned during different parts of the year.
How do I figure out how much to pay?
You can use IRS Form 1040-ES to help estimate how much tax you owe based on your expected income and deductions.
This form walks you through calculating your estimated tax liability for the year.
What happens if I don’t make estimated tax payments?
Staying on top of estimated taxes is important because it helps you avoid penalties or interest later.
If you don’t pay enough throughout the year, you may owe additional charges when you file your tax return.
Key takeaway
If you’re self-employed, estimated taxes help you pay taxes on income that isn’t automatically withheld. Paying throughout the year can help you avoid penalties and keep tax season running smoothly.
This content is provided for informational purposes only and should not be construed as tax, legal, financial, accounting, or other advice. Rules and regulations vary by location and are subject to change, so please consult with an expert if you need advice specific to you.
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