Small Business & Freelance Quarterly Taxes – Due Dates | H&R Block
Poor financial management is among the top causes of 98% of small businesses closing within 10 years of opening a small business. One of the most important aspects if financial health as a small business owner is understanding your tax obligation. In fact, not knowing what taxes are due can take a hit on your profits.
If you’re a small business veteran, you know that in addition to filing an annual tax return, you will likely make quarterly estimated tax payments. For new business owners, estimated tax is when the IRS requires freelancers and small business owners who surpass a specific income threshold to pay four installments throughout the year.
Who Pays Estimated Tax?
Self-employed individuals, including sole proprietors, partners, and S-corporation members or shareholders typically have to make an estimated tax payment each quarter. This is the case if they expect to owe $1,000 or more when their tax return is filed. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.
Generally, the payments are due on income received when income taxes have not been withheld. This includes self-employment income, interest, dividends, alimony, rent, capital gains, prizes, and awards.
If the tax owed is more than $1,000 when returns are due, you may be penalized. Taxpayers can be exempt from this penalty if withholding and timely quarterly payments total one of these:
- 100% (110% for higher-income taxpayers) of the amount calculated for last year’s return
- 90% of the balance due for the current year
Not all small business owners or freelancers are subject to paying an estimated quarterly tax.
Quarterly Estimated Payment Due Dates
If you know you owe quarterly taxes this year, understand the payment schedule. While dates may change, quarterly estimated taxes are always due mid-month in April, June, Sept., and Jan.
The next quarterly estimated tax payment is due to the IRS on June 15, 2017. (You should have already paid estimated taxes on Q1 earnings on or before April 15, 2017. Here is the schedule for 2017:
Source: Yale University
Still need help determining if you need to pay estimated taxes on a quarterly basis? Read the IRS’ Form 1040-ES, Estimated Tax for Individuals (PDF), or Form 1120-W, Estimated Tax for Corporations (PDF), for more details on who must pay estimated tax.
The W-4 Form is the IRS document you complete for your employer to determine how much should be withheld from your paycheck for federal income taxes and sent to the IRS. Accurately completing your W-4 will help you avoid overpaying your taxes throughout the year or owing a large balance at tax time.
What are the tax brackets for U.S. taxes? Review income tax brackets based on your filing status and taxable income and understand how they apply to you.
In the past, joint filing could sometimes put couples into a higher tax bracket. Learn more about the disadvantages of married filing separately returns with help from H&R Block.
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