Pay Quarterly Estimated Tax

Staff Reports
by Staff Reports

 

You should pay self-employment tax if you operate a business as a sole proprietor or independent contractor.

Being a member of a partnership that operates a business or being in business for yourself also requires you to pay self-employment tax.

The self-employment tax creates revenue for the federal government that is used to fund social security and Medicare. Individuals who aren’t self-employed pay payroll taxes instead. The self-employment tax rate is 15.3.% in 2010.

Because you should pay federal income tax throughout the year, like you would through payroll withholding, the IRS requires self-employed individuals to pay quarterly estimated tax.

Make estimated payments using payment vouchers. Vouchers can be had through your tax professional or from the IRS. There is no such thing as an estimated tax return. In other words, you do not file a separate return each quarter.

The first estimated quarterly payment is usually due on April 15. At this time, you can decide to pay the entire year’s worth of estimated tax or break it down into four installments. If you opt to pay quarterly, the due dates fall on April 15, June 15, September 15, and January 15.

What if the due date happens to fall on a holiday, Saturday, or Sunday? In this case, your payment will be considered on time if it is received by the next business day.