While it is true that for many freelancers (or people who earn significant untaxed income from investment, rentals, etc), paying estimated quarterly taxes will help them avoid penalties in the form of interest charges, but it's not something everyone has to worry about. Below is a helpful guide.
NOTE: We can't guarantee that these guidelines will apply in every situation, these are just some basic guidelines that can help.
STEP 1: Should you care about estimated tax payments?
- Did you owe more than $1,000 to the IRS when you filed your most recent tax return?
- Did you have a big tax bill recently that you want to avoid for next year?
- Are you having a big year for freelance income or other untaxed income (rental properties, large investments, etc)?
If you said yes to any of these questions, you should consider paying estimated taxes quarterly. You'll save money and decrease your stress around tax time!
STEP 2: Figure out how much you should pay.
- Follow a well written guide online (like this one) or use the estimates outlined in our guide
- Have us figure it out for you: email us to setup a consultation with one of our preparers (generally $125 for a 1-hour consultation)
STEP 3: Make your payments.
Drop a check in the mail with your payment voucher or pay online (Federal link, New York link, California link)
STEP 4: Deep calming breaths. You did it!
Still not sure how much to pay or if you should be paying? Reach out to firstname.lastname@example.org for help in setting up a consultation, individualized for your situation.