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Should You be Making Estimated Tax Payments?

April 16, 2015

Employees get their taxes withheld from their income with every paycheck that they receive from their employers. The self-employed, on the other hand, are required to estimate their taxes and pay them on their own. First, let’s consider the conditions that make you self-employed. You are typically self-employed if you choose:

  • The place where the work must be done,
  • The hours that will be needed to complete the work, and
  • The manner in which the work will be done.

Independent contractors also fall under the category of the self-employed.

Are You Required To Pay?

If you are self-employed, you need to pay estimated taxes because they are not withheld from your paycheck. You will be required to pay estimated taxes for 2015 if you owe $1,000 or more in taxes for the year. For farmers and fishermen, special rules apply.

How to File

When preparing your tax return, include every deduction and credit that you are eligible for to lower your tax liability. To calculate your estimated taxes and pay them, use Form 1040-S, Estimated Tax for Individuals. You can use IRS Direct Pay to handle your taxes online. You can also make your payment over the phone or through the mail.

Usually, estimated taxes are paid quarterly. The payment dates are April 15, June 15, September 15 (in 2015), and January 15 (in 2016).

Consider Life Changes

Major changes in your life such as the birth of a child, marriage, divorce, deaths, etc. can impact your taxes. Therefore, if there are any major changes in your life during a tax year, you’ll need to determine if it impacts your taxes. Accurately determining your tax liability will help you to avoid back taxes.

 

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