How to Pay Taxes Quarterly
Owning your own business or working as an independent contractor can get interesting around tax season. Considering that you are 100% responsible for paying your own taxes, you want this process to be as easy as possible. Knowing how to pay your taxes quarterly helps take the strain off of owing one big lump sum at the end of the year.
- Create a" tax account" (savings) to save money for your taxes. Since taxes can end up being up to approximately 35% of your total income, plan to set aside and save somewhere around that amount. Make a monthly budget to help you stay on track with your quarterly tax payments. Transfer one lump payment into your "tax account" each month.
- Estimate what you owe quarterly. Each quarter total your income and then subtract your exemptions and deductions from that quarter. This will give you a good estimate of what you owe for that quarter. If your income will be around the same amount from the previous year, you can split that total tax payment into four equal payments. If you happen to underpay or overpay the adjustments will be made the following year in April.
- Use a 1040-ES form to pay taxes quarterly on April 15th, June 15th, September 15th, and January 15th. Go to the IRS website and locate the 1040-ES for estimated taxes. You can print out the form, fill it out, and mail it along with the payment or fill the form out online and make an electronic payment. Make sure to obtain a copy of the completed tax form for your records.
- Hire an accountant to do all the work. If you feel like you will be unable to keep up with your quarterly payments or you’re just not good at math hire a professional to do your quarterly taxes for you. This takes the pressure off of yourself, and also allows you to stay on track with your quarterly tax payments.