Small Business Services

Reminder for the Self-Employed: Estimated Tax Payments Are Due June 15!

Poor financial management is among the top causes of small businesses closing within five years of opening a small business. Not knowing what’s due and when can kill a small business. This includes taxes… In addition to filing your annual tax return, qualifying small business owners must make quarterly estimated tax payments.

What is Estimated Tax?

Estimated tax is a method of paying tax on income not subject to withholding tax. The IRS requires estimated tax to be paid quarterly, typically in four installments.

Who Pays Estimated Tax?

Self-employed individuals, including sole proprietors, partners, and S corporation members or shareholders typically have to make an estimated tax payment each quarter. This is the case if they expect to owe tax of $1,000 or more when their return is filed. Corporations generally have to make estimated tax payments if they expect to owe tax of $500 or more when their return is filed.

Generally, these tax payments are due on income received when income taxes have not been withheld. This includes self-employment income, interest, dividends, alimony, rent, capital gains, prizes, and awards.

If the tax owed is $1,000 or more when returns are due, you may be penalized. Taxpayers can be exempt from this penalty if withholding and timely quarterly payments total one of these:

  • 100% (110% for higher-income taxpayers) of the amount calculated for last year’s return
  • 90% of the balance due for the current year

When Are Estimated Quarterly Payments Due?

If you know you owe quarterly taxes this year, understand the payment schedule. While dates may change, quarterly estimated taxes for calendar year taxpayers are always due mid-month in April, June, Sept., and Jan.

Save the Date!

The next quarterly estimated tax payment is due to the IRS on June 15, 2017. (You should have already paid estimated taxes on Q1 earnings on or before April 18, 2017. Here is the schedule for 2017:

Screen Shot 2017-04-06 at 3.23.02 PM

Source: Yale University

Where To Go For More Information

Still need help determining if you need to pay estimated taxes on a quarterly basis? Consult a Tax Advisor at Block Advisors to manage your tax obligation. Make an appointment year-round here.

You can also view the IRS’ Form 1040-ES, Estimated Tax for Individuals (PDF), or Form 1120-W, Estimated Tax for Corporations (PDF), for more details on who must pay estimated tax.

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