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quarterly tax calculator

The U.S. taxation system works on a pay-as-you-go basis which simply means that you must pay your taxes as you earn. Most taxpayers, specifically the W2 employees don’t have to worry about it since their employer withholds money from their paycheck to pay their taxes.

However, the same isn’t the case with freelancers. As a self-employed worker, you have to pay dues to the government yourself. You must pay your taxes four times a year. These taxes are known as estimated quarterly tax payments, and the sum of these payments must match your tax liability for the year.

So if you are self-employed, you must pay quarterly taxes, specifically, if you owe $1,000 or more in taxes when you file your annual return. The same is the case with corporations that expect to owe at least $500 to the government.

Usually, the estimated tax due date falls on the 15th of April, June, September, and January. However, for the year 2022, the due dates are slightly different. The following table represents the quarterly tax due dates for the following year (2022):

If any of the above-mentioned due dates happen to fall on a weekend or a holiday that year, you can pay on the next business day.

It has been observed that most freelancers struggle with their quarterlies — over 53 million people in the U.S. are freelancing where 75% are overpaying on taxes since they don’t consider deductions while calculating their expenses.

The following represents some of the common tax deductions available for freelancers:

• Home Office: If you work from home, you can claim the self-employed home office deduction. The deduction helps you deduct all the expenses related to your home office such as Utilities, Rent, Mortgage, Cleaning Supplies, Furniture, etc. These work from home tax deductions are highly beneficial.
• Internet & Telephone Expenses: A stable internet connection is a necessity especially if you conduct your business from home. So you can claim internet tax deduction. Similarly, if you have a separate telephone line for your home office, you can deduct the bill from your taxes.
• Office Supplies: Any equipment or supplies you require to operate your business qualify as a deductible expense.
• Education Expenses: You can also deduct the cost of your education. However, you must prove that the program or course helps maintain or improve skills required in your trade, or that it is required by law for keeping your license or renewing your certification.

The IRS permits you to deduct any expenses that are both ordinary and necessary in your trade or industry. So, there are many other deductions that you can claim as a freelancer, depending on your profession.

Now, when it comes to filing your taxes as a self-employed worker, you’ll need to submit form 1040es with your income tax return. Most self-employed workers need to file Schedule C with their tax returns. You can send estimated tax payments using one of these many payments methods:

• Electronic Federal Tax Payment System (best option for businesses or large payments; enrollment required)
• Electronic Funds Withdrawal (during e-filing)
• Same-day wire
• Check or money order
• Cash

In such cases, your tax liability is almost completely taken care of. However, this is most common for people who have received a refund for the previous year’s taxes and use that to pay their upcoming year’s taxes.

Avoiding or not paying your 1040es taxes on time can lead to penalties. The IRS can charge a penalty for delayed or inadequate payments, even if you’re due a refund when you file your tax return. These estimated tax penalties can be steep.

So to avoid being penalized, it’s not only important to calculate your taxes properly but to also file them on time. There are multiple ways to accomplish this task, ranging from computing the data to a spreadsheet to using tax software.

Once you’ve figured out your preferred method, make sure to consult a CPA to claim all the appropriate deductions associated with your line of business.