No one is excited about paying taxes, but for the most part, they're unavoidable for the working woman. Yet, not everyone has to pay quarterly taxes. You may have to get acquainted with quarterly taxes depending on how you earn money and who signs your paychecks. Not only is it essential to know if you should pay quarterly tax payments, but you need to know what your tax liability is and the deadline to submit your taxes — unless you want the IRS visiting.
Who Needs To Pay Quarterly Taxes?Giphy
Plan on paying taxes if you're a small business owner, you haven't had enough of your income withheld, or you're a self-employed individual. Unsure if you're self-employed?
You're self-employed or a small business owner if you're:
- An independent contractor
- A full-time/part-time freelancer
- An individual with a side gig
- A sole proprietor
- A business partnership member - LLC, LLP, LP, GP
You haven't had enough income withheld if:
- You owe a minimum of $1000 in federal income taxes currently after accounting for your refundable and withholding credits.
- Your withheld and refundable credits don't cover more than 90% of your tax liability for the current year or 100% of your liability for the previous year; whichever is lesser of the two. (The threshold is 110% as long as your adjusted gross income in the prior year was larger than $150,000 for jointly filed married partners and $75,000 for singles).
Who Doesn’t Have To Pay Quarterly Taxes?
You don't have to pay to make quarterly tax payments if you're a U.S. citizen or a permanent resident who had no tax liability from the previous year. Also, individuals who don't have untaxed income.
How To Estimate Quarterly TaxesGiphy
To calculate your estimated tax, you should know your expected adjusted gross income, taxes, deductions, taxable income, and credits for the current year. Then, you can calculate your estimated quarterly taxes using a calculator or manually:
1. Determine Taxable Income. Start by estimating the total amount of income you're expecting to earn during the year. Then subtract deductions that are considered above the line (expenses the IRS allows you to deduct from your gross income) to get an adjusted gross income.
2. Calculate Income Tax and Self-Employment Tax. Once you know your adjusted gross income, it's time to calculate your taxes. First, you need to figure out your tax bracket to determine the rate that you are taxes based on your income. Then, take your income tax rate and multiply it by your adjusted gross income.
If you're self-employed, you calculate your taxes a bit differently. There isn't any need to pay taxes on self-employed income under $400, but if you make more than $400, then you're responsible for a 15.3% tax that's a combination of social security tax and medicare. But, you're only responsible for paying taxes on 92.35% of your estimated total income.
If you had a $50,000 estimated total income, the calculation would be 50,000 x 15.3*% 92.35%, for a total of $7,076.25 in owed taxes.
3. Total Taxes and Divide By Four. Lastly, add your income tax and self-employment tax for the current year and divide your total by four. So pretty much if you owe $10,000 in income tax and you owed $15,000 in self-employment tax, your total income tax is $25,000.
So next, you'd divide $25,000.00 by four, so your quarterly tax payment would be $6,250.
When Are Quarterly Taxes Due
If you plan on paying quarterly taxes, it's a bright idea to know when they're due:
- If you earned income on September 1–December 31, 2020, your quarterly tax payment is due by January 15, 2021.
- If you earned income on January 1–March 31, 2021, your quarterly tax payment is due by April 15, 2021.
- If you earned income on April 1–May 31, 2021, your quarterly tax payment is due by June 15, 2021.
- If you earned income on June 1–August 31, 2021, your quarterly tax payment is due by September 15, 2021.
- If you earned income on September 1–December 31, 2021, your quarterly tax payment is due by Jan 18, 2022.
How Do I Pay Quarterly Taxes?
There are three ways to pay quarterly taxes; the choice is yours. You can pay your taxes the old school way by mailing your estimated tax payments with IRS Form 1040-ES or paying in cash at an IRS retail partner.
Or, you can keep it modern by paying electronically using the IRS's Direct Pay System or the U.S Treasury's Electronic Federal Tax Payment System. Keep in mind, there is a credit card fee of approximately 2% when paying electronically.
You can mail your estimated tax payments with IRS Form 1040-ES. You can pay electronically and use the IRS's Direct Pay system or the U.S. Treasury's Electronic Federal Tax Payment System, for example. Paying with a credit card carries of fee of around 2%.
Now that you have all of the proper knowledge to make quarterly tax payments, it's time to start actually planning to make your payments. Be sure to estimate your taxes reasonably in advance to avoid lacking enough funds to cover your tax payments. Or, you can simply reach out to an accountant who has the expertise to ensure your taxes are taken care of properly.
Featured image by Getty Images
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Aaliyah Sydonie Williams is a lover of pomegranates, intimate concerts, fluffy socks and all things R&B. She's a founder of a college advice blog, Her Little Corner, where she dishes helpful advice for college students to slay their college experience. When Aaliyah isn't eating at Starbucks, she's studying for her courses in finance, discovering new spots in the city, and brushing up on her photography skills. Keep up with her at Aaliyah Williams (@aaliyahsydonie).
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If you look up the definition of ‘boss’ in the dictionary, an image of La La Anthony is bound to appear.
The mother, actress, and new skincare founder has added the title of “leading lady” to her list of hyphenates with shows like BMFand Power under her belt. But with so much many boss moves to manage, one can only wonder how she manages to get it all done — while making it look so effortless.
In an interview with BET.com, the businesswoman unpacked her perspective of self-care as someone fully immersed in her at-home and on-screen duties.
“My form of self-care [is] turning my phone off. That's something I just implemented not too long ago at night once I'm ready for bed. And that's something I never did,” she says, adding. “Self-care is a night of uninterrupted sleep because my phone will go off all night, and I work crazy hours. To be able to sleep and not have the phone constantly waking me up is a form of self-care.”
She notes that the lack of sleep and overworking has contributed to her experiencing burnout and emphasizes the importance of taking care of herself as someone always on-call and in high demand. But with healthy boundary setting and showing up for her needs, she’s been able to work towards striking a balance.
“Sometimes I'm like, ‘Okay, I'm there for everybody. I have to be there for myself as well.’ And I just stop and say, ‘What did I do these last couple of days that [made] me feel like that? What can I do differently?” she explains. “A lot of times for me, it really is a lack of sleep [and] staying up really late, waking up super early, or working really late. I have to remind myself why something as simple as sleep is so important.”
When you’re someone as high-profile as La La, having moments where you feel like you’re being spread too thin is inevitable. However, saying ‘no’ before you reach a point of burnout is an act of self-care that aids in the prevention of future fatigue.
She later acknowledges her past struggles with setting these boundaries out of the desire to always be there for everyone and avoid disappointing others. However, she soon realized the importance of taking care of herself first and that if she's not at her best, she can't fully show up for anyone else.
“I was a person that did not know how to say no. [I] never want to disappoint people. I think that's the cancer in me, like never wanting to disappoint people, always wanting to be there,” she says. “But if I'm not at my best, I can't be great for anyone. So utilizing and being okay with saying ‘no’ sometimes is something that I'm still learning but getting better at.”
If we can take a page out of La La’s book, learning to say ‘no’ and creating boundaries is a process that will always have room to grow, but understanding its significance is the key to a well-rounded and balanced state of well-being.
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Featured image by Noam Galai/Getty Images for Netflix