You started a new job this year which refuses to withhold taxes from your pay. Although it’s lovely to receive the extra money, this unfortunately requires you to pay quarterly taxes or you’ll be subject to IRS fines at the end of the tax year. You don’t know about the rest of the world, but you can barely bring yourself to file taxes once a year, let alone four times, especially when you have no clue how to determine how much you owe.
How do you go about estimating your taxes when you haven’t received the entirety of your income for the year?
Assessing How Much You Owe Before the Year Is Over
Quarterly taxes are based on how much your adjusted gross income will be for the entire year. Although this may seem illogical—you certainly don’t want to pay full taxes four times a year—the IRS form that you’ll be using to calculate your quarterly tax bill will take this into account.
The easiest way to determine your estimated tax amount is to follow these IRS filing guidelines:
- Browse the IRS website to check for any recent changes in tax law
- Use your prior year's federal tax return as a guide. Your prior income, deductions, and credits can be used as a baseline
- Fill out the worksheet on Form 1040-ES to the best of your ability
- Using the information provided on the form, estimate the amount of income you expect to earn for the year
- If you estimated your earnings too high or too low, simply complete another Form 1040-ES worksheet to refigure your estimated tax for the next quarter
- You want to estimate your income as accurately as you can to avoid penalties
- You must make adjustments as needed depending on changes to your income and to tax laws
Once you have your payments figured out, you’ll have four separate dates on which to file. For estimated tax purposes, the year is divided into four payment periods:
- April 15 (covers tax period January 1 through March 31)
- June 16 (covers tax period April 1 through May 31)
- September 5 (covers tax period June 1 through August 31)
- January 15 of the following year (covers tax period September 1 through December 31)
Dates are subject to change when they fall on Sundays and holidays.
You can pay these taxes via the Electronic Federal Tax Payment System (EFTPS).
When Quarterly Payments Have You Wholly Confused
Filing taxes can be extremely confusing and frustrating for many people. Unfortunately, when you have to file quarterly, you’re forced to endure quadruple the frustration. However, we’re here to help alleviate some of that burden. If you’re confused about your taxes or are worried that you’ll be audited, call us today for the legal advice you need to handle the IRS. We’re highly educated and trained in taxation law and will help you in every way possible to get your taxes in line. Don’t allow confusion to get you in trouble with the IRS. Call us today!
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