If you are self-employed, you are probably left with the responsibility of paying your estimated quarterly taxes. These taxes come from your next year’s tax liability not being covered by your income tax withholding. You will need to know what amount to pay, when to pay it, and what form to use.
The form you need to use is the 1040-ES. This is a payment voucher that asks for basic information like name, address, and social security number. You will also indicate how much estimated tax you are paying.
Although the payments are referred to as “quarterly” payments, they are actually not three months apart. The due dates are April 15th, June 15th, September 15th, and January 15th.
The easiest way to determine how much you need to pay is to review your tax return from the previous year. Take your total tax and subtract your withholding. Divide the result by four to get your amount for each of the four payments.
Throughout the year you may want to compare your income with last year’s to get an idea of how close these estimates will be. Remember, these estimated payments are based on your income from last year so if your business has drastically changed, for better or worse, you can adjust the payments in the third or fourth quarter. As always, check with your CPA about how IRS requirements affect you and your business.