It’s June 15th, do you know where your tax forms are? If you are self-employed, chances are they are close at hand because it’s almost quarterly estimated tax time. Scared? Don’t be. Here’s a quick Q&A on estimated quarterly taxes complete with answers with some of Outright’s favorite bloggers and money wizards.
What kind of taxes do I have to pay?
People who work for themselves have to pay Self-Employment Tax and Income Tax. We recently offered a refresher on the types of taxes self-employed people have to pay.
How much do I owe?
This is a tricky question and it is, of course, dependent on you. Bill Bischoff over at Smart Money magazine explains in detail how much money self-employed people actually have to pay the government in taxes each quarter, and he basically says that you had better pay at least 90% of the taxes you will owe for the year.
That’s nice, but seriously, how much do I have to pay?
Check out what June Walker, tax advisor to the self-employed since 1979, has to say about calculating how much quarterly estimated taxes you have to pay.
When are my payments due?
We’ve already passed the April 15th deadline, so for the tax year 2009 your quarterly estimated taxes are due on June 15th, September 15th, and January 15th.
How exactly do I pay?
To pay your estimated quarterly taxes you can do one of two things. You can fill out a form 1040-ES and send it to the IRS address nearest you, or you can file electronically using the Electronic Federal Tax Payment System (EFTPS). You have to enroll in the EFTPS before you use it, but after you are all set up, you can use it like a automatic debit for tax payments if you wish, and can even pay taxes over the phone if you are not comfortable giving out your information over the internet.
June 15th is Monday? I hate Mondays! What happens if I pay late?
Thankfully, you won’t be penalized too much. Nickel over at FiveCentNickel.com accidentally paid his estimated taxes a couple of days late last year and found that penalties for underpayment of quarterly estimated taxes are equal to a small amount of interest taxed on the amount you underpaid. So, you will have a penalty but it isn’t a bank breaker as long as you get it in.
Don’t be frightened. By Tuesday, quarterly estimated tax time will be a thing of the past and we won’t have to think about it again until forever and ever… Or at least until September 15th rolls around.
What do you think?
What are your burning questions about quarterly estimated taxes?
Find the answers in this post or ask the experts of the Outright Community!