Quarterly Tax Payments

[GLorena]

Recently started a side business! I apologize if this question has been asked already. 

Instead of paying quarterly taxes, When I report my income/expenses from my side business on my taxes, does TurboTax calculate what should be owed in taxes for that year and will the IRS deduct it then?

Also, are there and what are the penalties for not paying Quarterly Taxes? Is the penalties both state and federal? 

Thanks so much! 

[TeriH]

Good questions,

The U.S. has a pay-as-you-go system, so you'll need to pay taxes from your side hustle on a quarterly basis. The first quarterly tax deadline for 2023 is April 18. The IRS has a great guide for all you need to know about filing taxes for your gig work, including a calculator to estimate what you will owe in taxes.  https://www.irs.gov/pub/irs-pdf/p334.pdf

If you fail to make any quarterly payments and you owe tax, you could be subject to penalty and interest.  

The IRS may issue a penalty if you miss a quarterly tax payment deadline. The penalty is 0.5% of the amount unpaid for each month, or part of the month, that the tax isn't paid. The amount you owe and how long it takes to pay the penalty impacts your penalty amount.

With regards to quarterly state tax payments, it depends on the state.  See this link for further details. https://support.taxslayer.com/hc/en-us/articles/360031917272-Do-I-have-to-make-State-Estimated-Payme....

Best wishes,
teri