While preparing for tax season once a year is a miserable experience for many people, imagine if you had to do it four times. For many self-employed individuals, quarterly tax returns are a daunting reality. At E&Y Tax Preparation Services we see many self-employed small business owners. While we know that paying taxes is something no one enjoys, by paying quarterly you can avoid several different cash flow headaches. Here is a quick guide to help you get through your first or next quarterly tax filing.
Figure Out What You Owe
The most important step you should take when starting your quarterly tax filing journey is to know how much you owe each quarter. You’ll be expected to make payments by the following days:
- April 15th
- June 15th
- September 15th
- January 15th
To determine what you owe, you can divide what you owed on last year’s taxes by four. However, if you want to be very specific on your tax requirements for this current year, the professionals at E&Y Tax Preparation Services can help you determine this amount.
The best way to avoid penalties on underpayments is to pay off 100% of what was owed last year. We recommend that anyone who is gaining self-employment income pay quarterly taxes to avoid any and all penalties at all cost. Additionally, paying quarterly will help you avoid a giant tax bill all at once. The IRS, as caring and thoughtful as they are, will also accept extra payments at any time.
Don’t Forget State Taxes
Once you have your federal taxes squared away, it’s time to tackle the state taxes. Many of our customers at E&Y Tax Preparation Services often forget about the state tax bill, and become shocked when the numbers are so high. State taxes are filed annually, but you can manage the amount owed on a monthly basis. Figure out your total tax bill and divide that number by 12. Each month, put aside that amount of money and you wont be surprised when the bill comes around at the end of the year.
Making Quarterly Payments
Once you have all the numbers crunched and worked out, you can make easy quarterly payments online. By utilizing the EFTPS website, you can make one-time or scheduled payments.
By following our step-by-step guide on quarterly payments, as a self-employed business owner you’ll be more prepared when tax season comes around each year!
E&Y Tax Preparation Services (248) 362-1313