A Complete Guide to Pay the Quarterly Taxes

Just like a freelancer or a small business owner, you will see that by mastering the quarterly taxes is major key part of the running of a successful organization. In case you have come from the corporate or an employee background. Then this might need the shift in the mindset, as you definitely think of the taxes like something that you usually do once in a year. 

Though, a good news about this is that the payments of quarterly taxes actually permits you for spreading the tax responsibilities over one year. And thus avoid the disruption to the cash flow for the tax time. Here is a close look at how quarterly taxes actually work as well as what people need to know about the filing of their tax returns.

Who Is Needed to File the Quarterly Taxes?

 Anybody who is actually a self-employed person might be needed to pay the quarterly taxes. The self-employed person is generally someone who:

• Is the independent contractor
• Working in the trade or the field like a sole proprietor
• Is the member of the partnership which conducts the business, just like the LLC
• Does the business on his own that includes the part-time business

According to a business owner, while there was a start of the business, he was fully clueless regarding the quarterly taxes. But, IRS has literally made this very simple and easy. As the business owner, you only need to have a proper system in place and this makes it quite manageable.

What Taxes Do Self-Employed People Pay?

Like the self-employed person, you just file the yearly return but generally pay the estimated taxes on the quarterly basis. The quarterly taxes typically fall into 2 main categories:

• A self-employment tax (Medicare as well as Social Security)
• The income tax on the profits which your business make and also any other income

In the tax year 2017, for instance, a tax rate of self-employment on the net income up to 127,200 dollars is 15.3 percent. It breaks down to 12.4 percent Social Security tax as well as 2.9 percent Medicare tax.

• The high earners—usually, individuals with the incomes of 200,000 dollars or the married couples with the incomes of 250,000 dollars—are just subject to the Additional Medicare Tax of about .9 percent.

In order to calculate the taxable income like the business owner:

• Take the yearly gross income—the total revenue that you get—and also deduct expenditures, and other deductions that you are eligible for. For instance, in case the annual revenue was 100,000 dollars and you also have the business deductions which total 30,000 dollars. Then the taxable income is 70,000 dollars.

The Internal Revenue Service or IRS gives a complete listing and a reference guide for the owners of small business. The IRS Form 1040-ES is the worksheet which takes you through the calculation. And then assists you in determining the taxable income as well as payments.

When, you have the estimate for your taxes that you would owe for a year. Then divide that number by 4 and then submit the quarterly payments through their given dates. In case you undergo important alterations in the income or the expenditures for one year. Then that might affect the quarterly taxes that you have to pay.

• For instance, in case the company is losing an important client and your income decreasing as a result. Then you could adjust the quarterly payments.
• Alternatively, in case you land the main contract that boosts the income level. This might be prudent in order to revisit a worksheet to make sure that you’re actually paying the suitable amounts.

How to Pay the Quarterly Payments?

When, you have calculated the quarterly payments. You could submit those online via Electronic Federal Tax Payment System. Also, you could pay by using the paper forms that are given by the IRS. While you file a yearly tax return in the month of April then you would pay a balance of taxes which weren’t actually covered by the quarterly payments.

You also might use software like the Quickbooks Self Employed in order to track the income, expenditures, and the deductions throughout the whole year.