In this country, we employ a “pay as you go” federal estimated taxes. Employers are obligated to deduct and send income tax to the IRS at the end of each pay period in order to help the government track income accurately. To be eligible for a tax refund, you must file your return before the deadline.
Due to the lack of a human resources department that may deduct taxes from earnings, small business owners and independent contractors are compelled to submit quarterly anticipated tax payments. Thus, they need all the advice and guidance they can get.
Read on to discover this new guide to online payment of federal estimated taxes.
The Taxpayer’s Profile
– The Self-Employed Worker & Small-Business Owner
This category involves corporate entrepreneurs and independent contractors. As such, sole proprietors, shareholders of S corporations, partners, self-employed persons, and single-member LLCs must pay taxes in the form of estimated payments.
– The Freelancer With a Regular Income
This category involves contractors who work on a regular basis as independent contractors. If you have a full-time job that withholds taxes plus additional income, you should figure out how much of your income is tax-free. If you make a lot of money from freelancing, you should pay taxes on a regular basis.
The Calculation of Estimates
Form 1040-ES generates four vouchers that you can use to mail your estimated tax payments. Make sure to follow the directions on Form 1040-ES when calculating your estimated tax payments. In the event that payments are mailed, vouchers are included with Form 1040-ES.
If your income is erratic owing to self-employment, you have the option of paying varying sums to match it. This way, you can also avoid incurring late fees by making payments before the quarter’s minimum due date.
Additionally, you are not restricted to making four payments every three months. You can print a 1040-ES payment voucher for your extra payment online. However, note that with erratic income, taxes on self-employment earnings make it difficult to forecast total tax liability.
Here is the formula for self-employment tax: Multiply your Schedule C earnings by 92.35% and 15.3%. This is your self-employment tax.
You could be eligible for a tax deduction from your annual income, but it all depends on the tax category you fall into. Make sure to include the exact amount of your self-employment tax in your tax payment. When tax software prepares vouchers for the 1040-ES form, it takes the self-employment tax into account.
The Payment
When it comes to making payments toward anticipated taxes, you have several alternatives. Such alternatives are as follows:
- Transfer funds through mail.
- Pay through an electronic channel with a “convenience” fee.
- Enroll and pay through the free-of-charge Electronic Federal Tax Payment System (EFTPS).
- Use the IRS Direct Pay ACH transfer service at no cost.
- Use IRS2Go for mobile transactions.
- Use tax preparation software.
With all these options available, filing and paying your estimated taxes could be simple. All you have to do is ensure that you have a bank account, a Social Security number (or Employer Identification Number), a phone number, and an address.
Once you have mailed to the IRS, wait a week for an IRS PIN. Using this PIN, you will be able to perform an online transaction. With this, you will be able to make withdrawals once EFTPS has been established. You can make scheduled payments, such as quarterly payments.
Meanwhile, direct debits are supported by a variety of tax programs. This is great for freelancers since it can give them control over both the amount and the due date of the payment.
Conclusion
Indeed, regularly filing and paying your taxes is a daunting task. To make your life a lot simpler, consider not only seeking professional guidance but also making the most out of the resources available to you. With this new guide to online payment of federal estimated taxes, together with tax software, you shall never miss a deadline again!
Keystone Tax Solutions offers the best professional tax software you need today. With us, you can rely on excellent service at a reasonable price. Reach out to us today to get your FREE demo session!
