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Paying S Corp Quarterly Taxes: Everything You Need To Know
S Corp shareholders have to pay personal taxes on their taxable income. In most cases, this means paying quarterly taxes to the IRS. This guide will break down things like when does an S Corp pay quarterly taxes, how to pay them and what happens if you miss a deadline.
Table of contents
Key Takeaways:...Read more
What is an S Corp?...Read more
Does an S Corp have to pay quarterly taxes?...Read more
How many times is an S Corp taxed? ...Read more
When are quarterly taxes due?...Read more
What happens if you miss a quarterly estimated tax payment?...Read more
Do you have to file quarterly taxes or just pay?...Read more
How does an S Corp pay quarterly taxes?...Read more
Key Takeaways:
- S Corp estimated tax payments are due on April 15th, June 17th, September 16th and January 15th, 2025 for the 2024 tax year.
- You don’t have to file paperwork for quarterly taxes, you just have to pay.
- Missing payments deadlines can result in penalties.
What is an S Corp?
An S Corp is a type of business entity that has to pass its corporate income, losses, deductions and credits through to its shareholders. This pass-through taxation helps avoid the double taxation typically faced by C Corps. S Corp shareholders have to then report their share of the corporation's income and losses on their personal taxes. So when are S Corp taxes due? The deadline falls on March 15th. Knowing the S Corp tax dates is essential for business owners to avoid late filing penalties.
Does an S Corp have to pay quarterly taxes?
If you have income that isn’t subject to withholding (like self-employment earnings), you’ll probably need to pay estimated taxes. The S Corps need to make estimated tax payments to the IRS.
These payments are based on the corporation's projected annual taxable income. The main idea behind these estimated tax payments is to ensure that the IRS receives tax revenue steadily throughout the year, instead of one large payment at the end of the tax year.
For S Corp owners, paying quarterly taxes covers the tax due on your remaining business profit or the part of your income that isn’t taken as salary. The IRS says you have to pay estimated taxes if you’re an S Corp shareholder. and expect to owe $1,000 or more at tax time. This ensures you won't face a big tax bill or penalties at the end of the year. You can use a quarterly tax calculator to help figure out how much you owe. Form 1040-ES is what you’ll use to make estimated tax payments as an S Corp shareholder.
How many times is an S Corp taxed?
Unlike C Corps, S Corps are only taxed at the individual level. This is because S Corps are “pass-through entities”, which means the shareholders are responsible for paying personal taxes on their income from the corporation.
These taxes have to be paid as estimated tax payments. S Corp owners have to pay this in four installments. Remember that while S Corps pay quarterly taxes, this doesn't mean they have to pay self-employment taxes. S Corps shareholders usually pay income taxes, payroll taxes and state taxes.
When are quarterly taxes due?
As an S Corp owner, you might be asking “When are estimated taxes due for 2024?”. For S Corps, knowing when quarterly taxes are due is essential to avoid penalties. S Corps don’t pay federal income taxes at the corporate level, but they do make estimated tax payments on behalf of their shareholders.
S Corp estimated tax payments are due on April 15th, June 17th, September 16th and January 15th, 2025. S Corp quarterly taxes are important to prevent a large tax bill at the end of the year.
The IRS expects these payments to cover income taxes, Social Security taxes and Medicare taxes. You can stay on top of the S Corp taxes due dates by marking your calendars and keeping good financial records throughout the year.
What happens if you miss a quarterly estimated tax payment?
The IRS requires S Corp quarterly taxes to be paid based on projected income. This helps spread out tax payments, much like paycheck withholdings, instead of paying everything at tax time.
If you don't pay enough throughout the year, you could face penalties and interest when you file your taxes. You might get a penalty if you owe more than $1,000 and you've paid less than 90% of what you owe for the current year, or less than your total tax bill from the previous year.
The penalty is usually about 5% of the underpaid amount, but it can go up to 25%. Plus, the IRS adds interest based on current rates for any shortfall in payments. To avoid penalties, it's important to calculate and make S Corp estimated tax payments correctly every quarter.
While predicting your exact year-end income can be tricky, keeping good financial records and updating your income estimates regularly can help. You won't face a penalty if you've paid at least 90% of what you owe for the current year, or 100% of your previous year's tax, as long as you've made a reasonable estimate of your income. This is commonly known as the “safe harbor” rule.
Do you have to file quarterly taxes or just pay?
When you're handling quarterly taxes for your S Corp, it's all about staying organized and on top of your financial game. You don’t have to file any paperwork for your quarterly taxes, unless you’re mailing your returns to the IRS in which case you’ll have to attach Form 1040-ES In some cases, you might need to file some paperwork if you’re paying state or local taxes so make sure to check your state’s website for specific instructions.
How does an S Corp pay quarterly taxes?
The important thing about making S Corp estimated tax payments is making sure you have all the necessary information to correctly calculate what you owe. Here’s what you’ll need to do.
Find all your paperwork
Calculate estimated payments
Keep track of the IRS quarterly payment dates
Pay what you owe
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