Small Business & Freelance Quarterly Taxes – Due Dates
Poor financial management is among the top causes of 98% of small businesses closing within 10 years of opening a small business. One of the most important aspects if financial health as a small business owner is understanding your tax obligation. In fact, not knowing what taxes are due can take a hit on your profits.
If you’re a small business veteran, you know that in addition to filing an annual tax return, you will likely make quarterly estimated tax payments. For new business owners, estimated tax is when the IRS requires freelancers and small business owners who surpass a specific income threshold to pay four installments throughout the year.
Who Pays Estimated Tax?
Self-employed individuals, including sole proprietors, partners, and S-corporation members or shareholders typically have to make an estimated tax payment each quarter. This is the case if they expect to owe $1,000 or more when their tax return is filed. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.
Generally, the payments are due on income received when income taxes have not been withheld. This includes self-employment income, interest, dividends, alimony, rent, capital gains, prizes, and awards.
If the tax owed is more than $1,000 when returns are due, you may be penalized. Taxpayers can be exempt from this penalty if withholding and timely quarterly payments total one of these:
- 100% (110% for higher-income taxpayers) of the amount calculated for last year’s return
- 90% of the balance due for the current year
Not all small business owners or freelancers are subject to paying an estimated quarterly tax.
Quarterly Estimated Payment Due Dates
If you know you owe quarterly taxes this year, understand the payment schedule. While dates may change, quarterly estimated taxes are always due mid-month in April, June, Sept., and Jan.
Still need help determining if you need to pay estimated taxes on a quarterly basis? Read the IRS’ Form 1040-ES, Estimated Tax for Individuals (PDF), or Form 1120-W, Estimated Tax for Corporations (PDF), for more details on who must pay estimated tax.
What triggers the IRS to audit a tax return? Learn how common tax mistakes and errors can be a red flag and affect your chances of being audited by the IRS.
Find the current percentages for federal income tax rates, capital gains tax rates, Social Security tax rates and more from the tax experts at H&R Block.
The key to understanding your w-2 form is decoding the boxes and numbers. Learn how to read your w-2 form with this box-by-box infographic from H&R Block.
The tax experts at H&R Block outline how students and parents can file Form 8863 and document qualified expenses. Read about Form 8863 here.