Quarterly Taxes

Since freelancers don't have taxes automatically withheld from their pay, they may be required to pay their estimated tax liability quarterly to the IRS and state tax agency if applicable. This is known as paying quarterly taxes.

What are quarterly taxes?

Quarterly taxes are estimated tax payments that self-employed individuals and business owners are required to pay to the IRS four times a year. These payments are made to cover income taxes, self-employment taxes, and any other taxes that may be owed to the government.

The purpose of quarterly taxes is to ensure that taxpayers are paying their taxes throughout the year, rather than waiting until the end of the year to pay a lump sum. This helps to prevent underpayment penalties and makes it easier for taxpayers to manage their cash flow.

Who needs to pay quarterly taxes?

Self-employed individuals, freelancers, and business owners who expect to owe at least $1,000 in taxes for the year are generally required to pay quarterly taxes. This includes sole proprietors, partners in a partnership, and members of an LLC that is taxed as a partnership or sole proprietorship.

Corporations are also required to pay estimated taxes, but they follow a different schedule and are generally required to make payments on a monthly basis.

How are quarterly taxes calculated?

Quarterly taxes are calculated based on the taxpayer's estimated income for the year, as well as any deductions and credits that they expect to claim. The taxpayer must estimate their income and expenses for the year and use that information to calculate their expected tax liability. They can then divide that amount by four to determine their quarterly tax payments.

It's important to note that the estimated tax payments are just that - estimates. Taxpayers may need to adjust their payments throughout the year if their income or expenses change significantly.

When are quarterly taxes due?

Quarterly taxes are due on the following dates:

  • April 15
  • June 15
  • September 15
  • January 15 of the following year

If the due date falls on a weekend or holiday, the payment is due on the next business day.

What is Workmade?

WorkMade is an all-in-one banking and accounting app designed specifically for freelancers! WorkMade gives you access to: zero-fee business banking, automated bookkeeping, fast and easy invoicing, and quarterly tax estimations and payments.

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