I Didn't Know Anything About Quarterly Taxes For Self Employment

Forum|Forum|2 years ago
August 30, 2023
2 replies
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I have a side gig but had no idea about paying quarterly on the income, I thought it was all when I filed my taxes. I have no idea about how to do this, how much, etc.

Ask the Experts - Self-Employed - Aug 2023

Katie-P

Hi @bozley2016,

Thanks for your question. I'd be happy to help!

Paying quarterly estimated taxes does catch people by surprise. The IRS is a pay-as-you-go system, meaning they want their tax money as you earn in throughout the year. When you are an employee, that is normally taken care of by way of your federal and, if applicable, your state tax withholdings. When people start a side job, there is not any withholding on their net income, so that is why self-employed taxpayers pay in these quarterly estimated tax payments. Then, when they file their income tax return, they make sure to include in their tax return that they made these payments.

I am providing several links below to various resources that will help you better understand what to do:

I hope this information is helpful, @bozley2016 ! I'll stay tuned in case you have a follow-up question. Thanks again!

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MelanieC1

Hi @bozley2016

Congrats on starting your own business! Yes, being self employed or an independent contractor gives you the satisfaction of being your own boss but also comes with the responsibility of making the estimated tax payments.

To determine the amount of quarterly estimated taxes you should pay may be a little tricky the first year. Here is a tool to help you:

Estimated Payments Calculator

Once you have your tax return prepared for 2023, TurboTax will help you to estimate future taxes based on your 2022 income. Keep in mind that it is your responsibility to make adjustments if you have an increase from the estimates that TurboTax computes. Consider evaluating your income every quarter to make sure you are on track to have your best estimate of taxes owed during the year.

You can make and track your estimated tax payments on the IRS website by creating an account at

IRS Tax Payments

There are lots of great resources out there for the self employed. Here is one more link to a TurboTax article for you to review.

Estimated Taxes FAQ

Please reach out with additional questions!

Melanie, CPA

Colten93

This is my wife's first year working as a self-employed cosmetologist. She rents a booth at a salon. She did not make a lot of money this year, but neither of us knew about quarterly payments, or that we should be making them... What do we do now? Do we just wait until time to regularly file our taxes? Are we going to be hit with big penalties?

xmasbaby0

Employee

@Colten93 No one can see your information so we cannot predict whether you will owe. You mention that your spouse did not "make a lot of money this year". We do not know what "a lot of money" means to you, since that is very subjective. You will just have to enter all of your combined income to see how it comes out.

If you have self-employment income for which you will pay self-employment tax for Social Security and Medicare, you will need to use online Premium software or any version of the desktop software download so that you can prepare a Schedule C for your business expenses.

https://ttlc.intuit.com/questions/2926899-how-does-my-side-job-affect-my-taxes

https://ttlc.intuit.com/turbotax-support/en-us/help-article/form-1099-nec/1099-nec/L5qTsBiSe_US_en_US

https://ttlc.intuit.com/community/self-employed/help/how-do-i-report-income-from-self-employment/00/26653

https://ttlc.intuit.com/community/self-employed/help/what-is-the-self-employment-tax/00/25922

https://ttlc.intuit.com/questions/2902389-why-am-i-paying-self-employment-tax

https://ttlc.intuit.com/questions/1901340-where-do-i-enter-schedule-c

https://ttlc.intuit.com/questions/3398950-what-self-employed-expenses-can-i-deduct

https://blog.turbotax.intuit.com/self-employed/self-employed-tax-deductions-

calculator-2021-2022-50907/

https://ttlc.intuit.com/questions/1901110-do-i-need-to-make-estimated-tax-payments-to-the-irs

If you live in a state with a state income tax, you might need to make estimated payments to your state.

https://turbotax.intuit.com/tax-tools/calculators/self-employed/

https://ttlc.intuit.com/community/business-taxes/discussion/self-employed-don-t-miss-these-tax-moves/00/3400413

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**