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Estimated Taxes Filing
Here’s What You Need to Know About Quarterly Estimated Taxes
Each year, the Internal Revenue Service (IRS) collects quarterly taxes from companies, corporations, sole proprietors and self-employed individuals – every taxpaying entity in the U.S, either directly or indirectly. This means that if you are an employee at a company you pay indirect quarterly taxes when your employer withholds your income, so that it can pay its own quarterly taxes. You see these withholdings on your regular paycheck stubs.
If you are an employee, you probably receive a W-2 tax form at the end of the tax year, and you are only required to file your taxes once a year. But if you are a freelancer, a self-employed individual or a 1099 contractor, you’ll have to pay your quarterly taxes on your own.
Quarterly estimated tax payments can be helpful, as you don't have to pay a huge sum once a year. Rather, you can pay as you earn. Your quarterly taxes are directly dependent on the amount of income you make in a quarter. The payment is different every quarter, as self-employed individuals and freelancers income often fluctuates.
Table of contents
Do I need to pay my IRS quarterly taxes?...Read more
How much do I owe for my IRS quarterly tax returns?...Read more
Important dates for paying quarterly estimated taxes...Read more
What’s the penalty for not paying your quarterly estimated taxes?...Read more
How can I pay my quarterly taxes?...Read more
Do I need to pay my IRS quarterly taxes?
Yes, if you are a freelancer, 1099 contractor, self-employed individual or gig worker, quarterly tax payments are required by the IRS. This applies to anyone who is not on a company’s payroll and who are working as freelancers outside of their normal work.
The only exception to this is if you are a freelancer and you owe less than $1,000 in taxes, and you had no tax liability in the previous year, you are not required to pay quarterly taxes in the current year.
In addition, if you are a US citizen, and your prior tax year was at least 12 months, you'll be required to pay quarterly estimated taxes.
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How much do I owe for my IRS quarterly tax returns?
Before you make a quarterly estimated tax payment, you need to know the amount to pay. To find out what you owe, you need to consider your quarterly income information or the tax information from the previous year, your expenses and your state of residence. You can also use FlyFin's Quarterly Tax Calculator to get a good idea of your quarterly taxes.
Once you have a fair idea of your income, you can estimate your taxes. The IRS wants you to pay at least 90% of what you estimate your income to be each quarter, which is why they are called estimated taxes. Remember that if you pay less than 90% of your estimated taxes you can incur a penalty.
Quick tip
It's always better to overestimate your taxes than to accidentally underpay. If you end up overpaying on your quarterly taxes, you’ll get that amount back as a tax refund.
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Important dates for paying quarterly estimated taxes
All freelancers, 1099 contractors and self-employed individuals need to pay their quarterly estimated taxes on:
- April 15th
- June 15th
- September 15th
- January 15th of the following year
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What’s the penalty for not paying your quarterly estimated taxes?
If you don’t pay your quarterly taxes, or you underpay them, you might face the IRS’s wrath in terms of penalties. The IRS penalties can potentially double the amount of taxes based on the amount owed, so the more the amount not paid the bigger the penalty sum.
IRS penalties add up every month you delay your payment, and so does the interest amount attached to the total tax liability. It’s always better to pay your taxes on time rather than incurring penalties.
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How can I pay my quarterly taxes?
Due to the varying demographics of the country, the IRS offers two ways to pay your quarterly taxes.
The first is by check. You can send a payment check to the IRS or you can send a money order. Just drop it and a payment voucher in the mail to the U.S. Treasury Department to one of two addresses based on your state of residence.
The payment vouchers and the address are mentioned on the IRS Form 1040-ES. Just make sure to send the check in time for it to reach the IRS office before its due date.
The second method is using IRS Direct Pay to e-file. It’s also the easiest way to pay your estimated tax because you can make the payments in just a few clicks. You don’t need to work through the paperwork, and it’s usually a quick 10 to 15-minute job.
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What’s FlyFin?
FlyFin caters to the tax needs of freelancers, gig workers, independent contractors and sole proprietors. But anyone can file taxes through FlyFin! It tracks all your business expenses automatically using A.I. to find every possible tax deduction.
Then, our CPA team files a guaranteed 100% accurate tax return for you – to save you a couple thousand dollars and a ton of time on your taxes.
Download the FlyFin app and have your taxes filed in less than fifteen minutes, saving time and more money on your taxes than last year, guaranteed.
Need help navigating your taxes?
FlyFin's A.I. and 24/7 CPA support will guide you.
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