- You're required to make quarterly payments if you end up owing more than $1,000 in tax at the end of the year to avoid underpayment penalties.
- You can make your quarterly estimated payments here, but you actually file the tax return at the end of the year to reconcile the payments with what you owe.
- Generally, you want to figure your profit and calculate your estimated payments based on your marginal tax bracket for income tax, and around 15% for self employment tax - Social Security and Medicare - Here is a great tool to help you.
- The underpayment penalty is 5% of the tax due for each month, up to 25%, plus interest. The current rate is 8%.
- Typically, you file a federal tax return if your business makes more than $400 for the year. However, if you have offically began doing business and have a loss, you will want to file a tax return to capture the loss for possible carry over. You will need to check with the state department of revenue for their filing requirements for LLCs.
Please check out our Self-Employment Hub for great tips and resources. When you land on the site, scroll all the way to the bottom for the tools.
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