Being your own boss may be one of the best things that happens to a person in their career. However, besides its benefits, it also has some drawbacks, which can be pretty annoying when you want to cut your costs and handle your own taxes. The biggest drawback is the quarterly taxes you need to pay.
If you are working with a tax professional, there is nothing to worry about since s/he will handle everything on your own or inform you when needed. However, if you are handling your tax operations on your own, it might be a problem. Thus, we have covered a beneficial guide for you.
What Are Quarterly Taxes?
First, you need to understand what quarterly taxes are. Basically, they are tax types that you pay once every three months. They are just the parts of your estimated annual income tax. Paying this tax is required to cover your income tax, social security, and Medicare-related issues. These taxes can be considered self-employment taxes as well.
How to Pay Quarterly Taxes?
Unfortunately, you cannot simply log in to any system and pay your quarterly taxes. First, you need to fill out Form 1040, Schedule C. In this way, you are going to determine how much you owe as your quarterly tax. On the other hand, if your income is less than $5,000 for the last three months, you can also file Schedule C-EZ.
Once you are done, you are going to fill out Form 1040 with the balance you got from the Schedule. This will let you calculate the total tax you need to pay in a year. Although it is a simple process, things may get complicated when you file a joint return. In these cases, each individual needs to calculate their self-employed taxes individually. It may be a good idea to hire a tax professional in these cases. After this, you need to use Form 1040-ES, which will let you file your quarterly taxes.
It is worth noting that you need to provide your annual tax return for the previous year. Otherwise, your form will not be accepted.
Once you are done with all the steps, you can pay your quarterly taxes in two ways. The first and recommended method is paying your taxes via the Electronic Federal Tax Payment System. This is a quick and effortless way to pay your taxes. As for the second method, you can also use the mail-in vouchers on Form 1040-SE. It may take some time, but your payment will be processed eventually.
In case there will be any overpayments, the IRS will return them to your estimated taxes. This means that your tax burden will be reduced in the following years, depending on your overpayments.
You need to pay attention to filing your forms and making your payments on time to avoid any penalties. Depending on when you are going to pay your taxes, the dates vary.
What Are the 2022 Quarterly Tax Due Dates?
The due dates for quarterly taxes vary every year. As we noted before, it is important to pay attention to these due dates to avoid any penalties. Thus, we have provided the existing due dates for you in the following.
- First Quarter – Due Date: April 18, 2022
- Second Quarter – Due Date: June 15, 2022
- Third Quarter – Due Date: September 15, 2022
- Fourth Quarter – Due Date: January 16, 2023
Tax Tips for Self-Employed Tax Payers
It is possible to cut the cost of your taxes by developing a good tax strategy. Unfortunately, it is quite complex for individuals who have not studied the laws or taxation in the United States. Therefore, working with a financial advisor or tax professional may be a good idea to cut your costs. You can also cut your tax costs by harvesting your losses by simply working with a professional.
The good thing is that you don’t have to search a lot to find a good financial advisor no matter where you live in the United States. Additionally, keep in mind that quarterly taxes are based on your estimated income. Calculating these may be a challenging task, but you should never be afraid of paying more than you need to. Any overpayments will be deducted from your future taxes.