@Mdeleon2010 thank you for the question. So, the Self-Employment is one part of Estimated Taxes. Remember whether you file as a sole proprietor, partnership or a corporation, individuals often have to pay estimated federal and state taxes on profits from the business. This is an excellent Turbo Tax resource: Beginner's Tax Guide for the Self-Employed
In the abstract let’s do a quick example of self-employment income. For every $1,000 of net income, you would need to pay Self-Employment taxes of 15.3%, plus federal taxes, which range from 10% to 37%, and state taxes potentially as well. Taking the lowest percentages, the tax would be 26.3%. The tax bills could be significant, so you want to get out ahead of this and estimate what your net income is and make estimated payments. There is nothing worse than an unexpected bill.
This is how you would make the payments to the IRS after you have calculated the payment:
- You can submit them online through the Electronic Federal Tax Payment System.
- You can also pay using paper forms supplied by the IRS.
- When you file your annual tax return, you'll pay the balance of taxes that weren't covered by your quarterly payments.
I can also provide a link for the state if it applies to you. Just reply with your resident state.
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