Editor's Picks
Plan Now for Quarterly Tax Deadline
Related articles:
How to Decide If Consolidating Loans Is Best
Tax Tricks of the Self-Employed
While many consumers plan to wait eight or nine months before they start filling out tax forms, quarterly filers have a deadline approaching in mid-September.
Most of those who estimate tax payments on a quarterly basis are self-employed, like freelancers, construction workers, landlords and independent doctors or lawyers. Those living on a pension also file quarterly taxes unless they opt to have taxes withdrawn from each individual payment.
Many small-business owners and nine-to-fivers with a separate income stand to benefit from such a plan as well, according to Peter Hukki, an enrolled agent with JK Harris, the nation's largest tax representation firm.
"If you have a side job -- say a business or a Mary Kay job, or what have you -- that's going to increase your income," says Hukki. "The taxes you have withheld at work won't necessarily cover the income you have in the year."
Quarterly installments are due April 15, June 15 and Sept. 15, with an end-of-year payment on Jan. 15. The final installment ties up any loose ends: If the taxpayer has underpaid, he may face a hefty bill and potential penalties, but if he has overpaid, he's in for a rebate.
Filers must pay a self-employment tax of 15.3% to cover Social Security and Medicare, on top of their average tax rate, which varies by income bracket. The rule of thumb is to pay quarterly installments of either 90% of projected tax for the current year or 100% of the tax paid last year.
