If you’re self-employed or an independent
Posted: Tue Dec 24, 2024 7:11 am
If you’re self-employed or an independent contractor, you’re expected to pay a percentage of your income in the form of quarterly estimated taxes.
By paying your self-employed taxes as quarterly estimates (4 times throughout the year), the objective is to not owe any additional taxes once you file your annual tax return. The process of paying estimates spreads your tax liability throughout the year.
How Much in Taxes Do I Need to Pay Each Quarter?
Many experts recommend setting aside around 30-40% of your net income to put towards your tax burden.
Speaking from personal experience, if you’re married and filing a joint tax return, you’ll likely be closer to the 30% figure. If you file your tax return as single, plan on owing closer to 40% of your net income.
As you calculate the profits from your blog each month, set aside 30-40% of that income (in your business savings account) for tax purposes—most of which you’ll pay in the form of quarterly estimated tax throughout the tax year.
Paying Your Estimated Federal Quarterly Taxes
You’re not required to pay quarterly taxes on the federal level if you expect to owe less than $1,000 in taxes for the year (which isn’t likely if you’re here). If you’re filing your taxes as a corporation, though, you must pay taxes quarterly if you expect to owe more than $500 in annual taxes.
According to the IRS, “To calculate your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions and credits for the year.”
Not exactly the most clear explanation, right?
Because I use QuickBooks Self-Employed to manage the financial side of things with my blog business, they automatically calculate my estimated quarterly tax payments for me—based on my income and the way I categorize each expense. They’ll even remind me when (and how) to pay each quarter:
Screenshot of My Blog Taxes (Quickbooks Self Employed)
If online tools aren’t your thing, many small business owners opt to use a worksheet from the 1040-ES IRS form to determine the estimated quarterly taxes they’ll owe.
Usually, your estimated tax payments are split into four evenly-spaced armenia phone number library periods. Your quarterlies are typically due on:
April 15 (first quarter)
June 15 (second quarter)
September 15 (third quarter)
January 15 of the following year (fourth quarter)
In 2024, the payment periods are remaining the same as usual (if you’ll recall they changed slightly in response to the COVID-19 pandemic for 2020). Estimated tax payments for Q1 are still due on April 15th.
The IRS is also offering tax relief to qualifying individuals and businesses affected by coronavirus.
Quarterly tax payments can be paid by mail, online, by phone, or with a mobile device using the IRS2Go app. I recommend their online portal.
Become Familiar with Your State and Local Tax Requirements
The 30-40% recommendation we talked about above (in terms of how much income you should set aside for tax purposes) includes your local and state estimated quarterly taxes too.
Every state and locality has different expectations for taxes, and different rates accordingly. Some areas of the U.S. will expect you to pay quarterly tax estimates for both local and state authorities—and you may receive a tax penalty if your income goes over a certain threshold and you didn’t make a quarterly payment.
By paying your self-employed taxes as quarterly estimates (4 times throughout the year), the objective is to not owe any additional taxes once you file your annual tax return. The process of paying estimates spreads your tax liability throughout the year.
How Much in Taxes Do I Need to Pay Each Quarter?
Many experts recommend setting aside around 30-40% of your net income to put towards your tax burden.
Speaking from personal experience, if you’re married and filing a joint tax return, you’ll likely be closer to the 30% figure. If you file your tax return as single, plan on owing closer to 40% of your net income.
As you calculate the profits from your blog each month, set aside 30-40% of that income (in your business savings account) for tax purposes—most of which you’ll pay in the form of quarterly estimated tax throughout the tax year.
Paying Your Estimated Federal Quarterly Taxes
You’re not required to pay quarterly taxes on the federal level if you expect to owe less than $1,000 in taxes for the year (which isn’t likely if you’re here). If you’re filing your taxes as a corporation, though, you must pay taxes quarterly if you expect to owe more than $500 in annual taxes.
According to the IRS, “To calculate your estimated tax, you must figure your expected adjusted gross income, taxable income, taxes, deductions and credits for the year.”
Not exactly the most clear explanation, right?
Because I use QuickBooks Self-Employed to manage the financial side of things with my blog business, they automatically calculate my estimated quarterly tax payments for me—based on my income and the way I categorize each expense. They’ll even remind me when (and how) to pay each quarter:
Screenshot of My Blog Taxes (Quickbooks Self Employed)
If online tools aren’t your thing, many small business owners opt to use a worksheet from the 1040-ES IRS form to determine the estimated quarterly taxes they’ll owe.
Usually, your estimated tax payments are split into four evenly-spaced armenia phone number library periods. Your quarterlies are typically due on:
April 15 (first quarter)
June 15 (second quarter)
September 15 (third quarter)
January 15 of the following year (fourth quarter)
In 2024, the payment periods are remaining the same as usual (if you’ll recall they changed slightly in response to the COVID-19 pandemic for 2020). Estimated tax payments for Q1 are still due on April 15th.
The IRS is also offering tax relief to qualifying individuals and businesses affected by coronavirus.
Quarterly tax payments can be paid by mail, online, by phone, or with a mobile device using the IRS2Go app. I recommend their online portal.
Become Familiar with Your State and Local Tax Requirements
The 30-40% recommendation we talked about above (in terms of how much income you should set aside for tax purposes) includes your local and state estimated quarterly taxes too.
Every state and locality has different expectations for taxes, and different rates accordingly. Some areas of the U.S. will expect you to pay quarterly tax estimates for both local and state authorities—and you may receive a tax penalty if your income goes over a certain threshold and you didn’t make a quarterly payment.