While you enjoy working as an independent contractor in Texas, you must understand your tax obligations. For instance, do you know how to make estimated tax payments throughout the year?
Gain clarity on the matter with insights from Small Business Trends. Stay on the IRS’s good side by understanding tax laws.
Breaking down estimated taxes
Because you do not have an employer who withholds taxes from your earnings, you must handle the task yourself. Further, you must send tax payments four times throughout the year, not only during tax season.
Specifying estimated taxes
Two types of quarterly taxes exist: income tax and self-employment tax. You must pay income tax for your profits and other sources of income. Self-employment tax covers your Social Security and Medicare tax obligation. The percentage of tax you must pay can change from year to year, so working with an accountant familiar with helping independent contractors may help you meet your obligation every year.
Due dates for estimated taxes
You must pay estimated federal and state taxes four times throughout the year:
- April 15th
- June 15th
- September 15th
- January 15th
You can arrange it so that the IRS sends you payment vouchers every tax year. No matter if you receive payment vouchers, you bear responsibility for making payments on time. Take special notice of the January 15th due date. Even though the final due date falls on the following year, it still applies to the same tax year of the previous three due dates.
Do not let a lack of knowledge of estimated tax payments result in late fees and penalties. Adhere to the latest tax laws to avoid unnecessary legal trouble with the IRS.