**The next quarterly estimated taxes deadline is coming up on June 17th, 2013! If you have more questions about QET’s after reading this post, check out our Quarterly Estimated Taxes Q&A!**
Depending on what you do for a living and the types of income you receive, you may need to pay quarterly estimated taxes. As a general rule employees have income taxes withheld from their paycheck, but people with other types of income such as interest, dividends, alimony, rent or income from self-employment will often need to make quarterly deposits with the IRS for estimated taxes.
Quarterly deposits are not actually due based on a calendar quarter. You have to make deposits by April 15, June 15, September 15 and January 15 (dates vary if the 15th falls on weekends or holidays). Because estimating what you will owe in taxes can be difficult for the sole proprietor small business owner, the IRS offers two “Safe Harbors” in estimating your taxes.
1) You can pay in 90% of what you ultimately owe through making quarterly deposits and pay the remaining 10% balance due by April 15 each year or
2) you can pay in 100% of what you paid in total for the previous year in equal quarterly deposits and pay any remaining balance due by April 15.
You can make electronic deposits for free at EFTPS.gov or you can mail in a check or money order using Form 1040ES. Many tax professionals can also set up automatic quarterly payments for you when they file your prior year’s tax return or there are fee based services available online that will allow you to file your 1040ES and pay by debit or credit card.
Outright.com will help you calculate your tax estimate each quarter and don’t forget that sole proprietors have to make deposits for income tax plus self-employment tax. Remember that quarterly estimated taxes are only estimates. You still have to complete a tax return and calculate what your actual tax liability is each year.