So, you’ve taken the leap, ditched the 9-to-5, and are thriving in the wild, wonderful world of self-employment. You’re your own boss, and you’re loving it! But here’s the part where the IRS re-enters your life, and not as your biggest fan. When you’re self-employed, you don’t have an employer holding back taxes for you, which means you have to take on the not-so-fun task of making estimated quarterly tax payments to stay out of hot water with Uncle Sam.
Simply put, the IRS expects you to chip in a little something every few months to cover your income tax, Social Security, and Medicare obligations. You’re essentially paying taxes in advance throughout the year rather than all at once when you file. Quarterly payments keep the tax bill manageable and prevent a massive financial headache come April.
If you ignore quarterly payments, the IRS charges penalties (not fun) and interest (even less fun). Plus, by making these payments, you stay on top of your cash flow and avoid surprise debts that eat into your hard-earned cash. Think of it like giving the IRS tiny “hugs” four times a year instead of a big, scary bear hug once. Here are a few more benefits:
Generally, you’re expected to pay the lesser of:
Take some time to estimate your income, or better yet, team up with a tax pro.
The IRS requires payments four times a year:
Taxes can be tricky, and no one wants to make a mistake that lands them in IRS trouble. Lanier Tax Relief, LLC is here to make sure you’re covered, penalty-free, and keeping as much of your income as possible.
