I have a freelance business and am required to make estimated tax payments.
I went into my states revenue website (Wisconsin) and made the 4 quarterly payments under Individual Income Tax. I posted 20% of my earned income for each quarter throughout the year.
Now I’m wondering if I did this correctly. Am I supposed to be posting some of this to the IRS? I’m so confused… please clarify where I should be posting tax payments.
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Since Wisconsin has an income tax rate maximum of just over 7% you are withholding too much if you are withholding 20%. The tax paid to your state and to the IRS is completely separate. You pay estimated tax to each.
https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes
Yes, you should be paying some of this to the IRS. Wisconsin only has a tax rate of 7.65% at the highest. You can request a refund on this overpayment when you file your state return.
To pay your federal taxes, you can do this online as well. Go to EFTPS Online. Unfortunately, you may be underpaid for the year. Per the IRS, "if you receive income unevenly during the year, you may be able to vary the amounts of the payments to avoid or lower the penalty by using the annualized installment method. Use Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts to see if you owe a penalty for underpaying your estimated tax."
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