Psst. Don’t Forget to Pay Your Estimated Taxes in 9 Days.

BySaadat Qureshi
04/06/2024 | (Last Updated on 04/06/2024)

5 Min Read | Fact Checked

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Remember to Pay Your Estimated Taxes

Hey there! Are you hustling hard as a freelancer, juggling a side gig, or running your own business? Well, it's time to put on your responsible adult hat and remember to pay your estimated taxes. Yes, I know taxes are as exciting as watching paint dry, but trust me, it's crucial to avoid IRS penalties and keep your financial house in order.

So, if you've been procrastinating on filing your tax return (which is also due soon), don't forget to calculate and send in your estimated tax payment. It's like doing your homework before the deadline - boring but necessary.

• Freelancers
• Side hustlers
• Second job holders
• Business owners without automatic tax withholding

If you fall into any of these categories, paying estimated taxes four times a year is a smart move. It helps you spread out your tax payments and avoids the sting of a hefty bill on tax day. Plus, it keeps the IRS off your back, and we all know that's a win-win situation!

What are Estimated Taxes?

Let's break it down for you. Estimated taxes are quarterly payments you make to the IRS based on your income for that period. If you earn money that isn't subject to federal withholding like side gig earnings or rental income, you need to pay estimated taxes to avoid a massive tax bill at the end of the year.

It's like making mini-payments towards your tax bill throughout the year, so it doesn't hit you like a ton of bricks all at once. Think of it as budgeting for your taxes rather than scrambling to find a lump sum when tax season rolls around.

When are Estimated Taxes Due?

The deadlines for estimated taxes are usually on the 15th day of April, June, September, and January of the following year. But hey, if the 15th falls on a weekend or holiday, you get a little extension to the next workday. It's like a small tax season gift from the IRS!

Mark those dates on your calendar and make sure you don't miss the deadlines. Uncle Sam doesn't like it when you're tardy on your tax payments!

Who Has to Pay Estimated Taxes?

If you're a salaried employee with taxes automatically withheld from your paycheck, you might be off the hook for estimated taxes. But if you're an independent contractor, freelancer, business owner, or have other sources of income not subject to withholding, estimated taxes are your responsibility.

The IRS says you generally have to pay estimated taxes if you expect to owe $1,000 or more when you file your return. So, don't ignore those quarterly payments - they're essential for avoiding penalties and keeping the taxman happy.

How Do I Calculate and Pay Estimated Taxes?

Calculating your estimated taxes can be a bit tricky, but fear not, we're here to guide you through it. If your income is steady, estimate how much tax you'll owe for the year and send in one-fourth of that amount each quarter. Make sure to include self-employment taxes if applicable.

If your income fluctuates, use the IRS Estimated Tax Worksheet to help you do the math based on your earnings and deductions from the previous quarter. And when it comes time to pay up, you can fill out the 1040-ES form and send your payment to the IRS by mail or online.

Remember, paying your estimated taxes is like investing in your financial future - it may not be glamorous, but it's necessary for staying on Uncle Sam's good side!

Do I Also Have to Pay Estimated State Taxes?

It depends on where you live. Some states have no income tax, so you only need to worry about federal estimated taxes. But if your state does have income tax, you'll need to make estimated state tax payments following similar deadlines as federal taxes.

Check with your state's Department of Revenue or consult with a tax professional for personalized advice on state tax requirements. Remember, staying informed is the key to avoiding any unexpected tax surprises!

What If I Don't Pay My Estimated Taxes?

Missing your estimated tax payments can result in penalties from the IRS - and nobody wants that kind of trouble! So, set those reminders, mark your calendar, do whatever you need to do to avoid those pesky late fees.

If you owe over $1,000 in taxes after subtracting withholdings and credits or paid less than 90% of the current year's tax through estimated taxes, you could face penalties. But hey, we've got your back - check out the IRS's underpayment guide for more information on penalties and waivers.

Can I Avoid Paying Estimated Taxes?

Avoiding estimated taxes is like playing with fire - you might get burned with penalties! While some workers are exempt from making quarterly payments under certain circumstances, it's generally better to stay on top of your estimated taxes to keep the IRS happy.

If your income is exceptionally low or fluctuates seasonally, there may be exceptions to the estimated tax rule. Check out the IRS's guidelines or consult with a tax professional to see if you qualify for any exemptions or reduced payments.

Remember, paying your estimated taxes is like planting seeds for a bountiful harvest - it may not be fun now, but it pays off in the long run!

So there you have it - a crash course on estimated taxes and why they're essential for keeping your financial house in order. Don't let those quarterly deadlines sneak up on you - stay proactive and stay ahead of the game!

Saadat Qureshi

Hey, I'm Saadat Qureshi, your guide through the exciting worlds of education and technology. Originally from Karachi and a proud alum of the University of Birmingham, I'm now back in Karachi, Pakistan, exploring the intersection of learning and tech. Stick around for my fresh takes on the digital revolution! Connect With Me