Self employed

Hi girta,

Thank you for your question today!

To pay quarterly taxes you will first need to come up with a good estimate of the income and deductions you will report on your federal tax return.

You will then estimate your tax on that self-employed profit.  You can use the TurboTax Calculator, https://turbotax.intuit.com/tax-tools/.

Once you know your self-employed profit, and your estimated tax, then you can make an estimated tax payments.  You will make the estimated tax payments for your federal tax on the IRS website, https://www.irs.gov/payments.

For your OR state tax, OR does not have a tax calculator to estimated OR state tax.  You can use your prior year tax return, and your estimated self-employed profit, and make a state estimated tax payment on the OR website, https://www.oregon.gov/dor/Pages/Payments.aspx.

While you are not required to make estimated tax payments,  you could end up owing the IRS an underpayment penalty in addition to the taxes that you owe. The penalty will depend on how much you owe and how long you have owed it to the IRS.

Result: You might have to write a larger check to the IRS when you file your return.

The safest option to avoid an underpayment penalty is to aim for "100 percent of your previous year's taxes." If your previous year's adjusted gross income was more than $150,000 (or $75,000 for those who are married and filing separate returns last year), you will have to pay in 110 percent of your previous year's taxes to satisfy the "safe-harbor" requirement. If you satisfy this test, you won't have to pay an estimated tax penalty, no matter how much tax you owe with your tax return.

If you expect your income this year to be less than last year and you don't want to pay more taxes than you think you will owe at year end, you can choose to pay 90 percent of your current year tax bill. If the total of your estimated payments and withholding add up to less than 90 percent of what you owe, you may face an underpayment penalty. So you may want to avoid cutting your payments too close to the 90 percent mark to give yourself a safety net.

If you expect your income this year to be more than your income last year and you don't want to end up owing any taxes when you file your return, then make enough estimated tax payments to pay 100 percent of your current year income tax liability.

Here is a great resource to get you started, https://turbotax.intuit.com/tax-tips/small-business-taxes/estimated-taxes-how-to-determine-what-to-p....

I hope this information is helpful.  Have a great day!

Connie