Quantcast
Everything You Ever Wanted To Know About Quarterly Taxes
Getty Images

Everything You Ever Wanted To Know About Quarterly Taxes

Nothing in life is certain except for death and taxes.

Finance

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 Taxes

Giphy

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

All About Edging: The Ways Prolonging Pleasure Makes For Mind-Blowing Orgasms

Have you ever tried to stop yourself from having an orgasm…on purpose? I have and let me be the first to tell you how amazing of an experience it is. Edging is the practice of bringing yourself to the brink of orgasm without going all the way. Tension builds, pushing your mental and physical body to its edge—literally— delaying full gratification. I was introduced to edging by a past lover, who got a kick out of increasing my arousal without letting me orgasm. The buildup would literally make me feel like I was going to burst.

Keep reading...Show less
The daily empowerment fix you need.
Make things inbox official.
EXCLUSIVE: Stacey Abrams On What’s At Stake For Black Women Voters

Midterm elections are coming up on November 8, 2022, and a lot is on the line for voters. An election that people across the country are particularly focused on is the gubernatorial race in Georgia that has once again found the current governor, republican Brian Kemp, and the democratic candidate and former Georgia state representative Stacey Abrams competing for the coveted governor role. After the 2018 state election that was marred with voter suppression that favored the Georgia republicans, Abrams has committed herself to making sure that Georgians’ votes matter.

Keep reading...Show less
Angela Bassett On Why She Is Choosing The ‘Soft Life’ With Husband Courtney B. Vance

Angela Bassett has been a working actress in Hollywood for over 30 years and she doesn’t plan on slowing down. She admitted in her Nov./ Dec. 2022 cover story with Essence that she loves the fact that she is still able to get roles and at the end of the day, acting has always been her dream.

Keep reading...Show less
20 Journal Prompts For Entrepreneurs To Reflect, Learn, And Thrive

Many have touted the benefits of journaling, especially when it comes to one's mental health. I've always been one to keep a diary, but in recent years, journaling has become quite challenging for me. Nowadays, I feel like my thoughts are moving way faster than my hands can write, which frustrates me to the point of not even bothering to write them down. (And I'm not a fan of putting my personal business online or on my phone via an app. I'm one of those people who fears that there's always somebody who either has access or can gain access and the possibility is just too creepy and scary for me to even attempt to use any digital form of a journal—cybersecurity be damned.)

Keep reading...Show less
LeToya Luckett Opened Up About Her Battle With Cystic Acne

Cystic acne is the most severe form of acne that causes painful pimples that are often filled with pus. According to Cleveland Clinic, cystic acne also has bacteria in the pores that cause swelling and inflammation which can lead to scarring on the skin. In her YouTube series, Leave it to LeToya, LeToya Luckett revealed her personal battle with cystic acne. “Baby, if I could tell you. I know what it feels like to have that broken-out cystic acne, scarring feeling so ugly, if I can be honest,” she started.

Keep reading...Show less
Exclusive Interviews
Latest Posts