Taxes must be paid as you earn or receive income during the year, either through withholding or estimated tax payments. If you are in business for yourself, you generally need to make estimated tax payments. Estimated tax is used to pay not only income tax, but other taxes such as self-employment tax and alternative minimum tax.
Regarding estimated tax payments:
- Individuals, including sole proprietors, partners, and S corporation shareholders, generally have to make estimated tax payments if they expect to owe tax of $1,000 or more when their return is filed.
- If you don’t pay enough tax through withholding and estimated tax payments, you may have to pay a penalty.
- You also may have to pay a penalty if your estimated tax payments are late, even if you are due a refund when you file your tax return.
- For estimated tax purposes, the year is divided into four payment periods. Each period has a specific payment due date. If you don’t pay enough tax by the due date of each of the payment periods, you may be charged a penalty even if you are due a refund when you file your income tax return.
- Generally speaking, the IRS assumes that income is earned ratably throughout the year, so they expect the quarterly payments to be paid ratably as well. If your income varied during the year because, for example, you operated your business on a seasonal basis or started your business late in the year, you may be able to lower or eliminate the amount of one or more required installments by using the annualized income installment method.
- For tax year 2024, quarterly payments are due on April 15 2024, June 17 2024, September 16 2024 and January 15 2025.
You may send estimated tax payments with Form 1040-ES by mail, or you can pay online, by phone or from your mobile device using the IRS2Go app. You can also make your estimated tax payments through an online account with the IRS, where you can see your payment history and other tax records.
Since you are self-employed, you will have to estimated not only your income taxes, but also your self-employment taxes, to determine how much you need to pay in estimated quarterly tax payments. Self-employment taxes are calculated as 15.3% times 92.35% of your net earnings from self-employment. You calculate net earnings by subtracting ordinary and necessary trade or business expenses from the gross income you derived from your trade or business.
In terms of estimating your overall income tax liability, you would use the IRS Tax Brackets to determine the amount of taxes on your overall taxable income. For tax year 2024, the tax brackets are as follows:
| Tax Rate |
Single |
Married filing jointly |
Married filing separately |
Head of household |
| 10% |
$11,600 or less |
$23,200 or less |
$11,600 or less |
$16,550 or less |
| 12% |
$11,601 to $47,150 |
$23,201 to $94,300 |
$11,601 to $47,150 |
$16,551 to $63,100 |
| 22% |
$47,151 to $100,525 |
$94,301 to $201,050 |
$47,151 to $100,525 |
$63,101 to $100,500 |
| 24% |
$100,526 to $191,950 |
$201,051 to $383,900 |
$100,526 to $191,950 |
$100,501 to $191,950 |
| 32% |
$191,951 to $243,725 |
$383,901 to $487,450 |
$191,951 to $243,725 |
$191,951 to $243,700 |
| 35% |
$243,726 to $609,350 |
$487,451 to $731,200 |
$243,726 to $365,600 |
$234,701 to $609,350 |
| 37% |
Over $609,350 |
Over $731,200 |
Over $365,600 |
Over $609,350 |
TurboTax has a Self-Employment Tax Hub with tons of resources, for tax tips, tools, etc., including Self-Employment Tax Calculators. you can find our Self-Employed Tax Hub at this link: TurboTax Self Employed Tax Hub
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