How to Pay Quartely Taxes

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Most self-employed individuals are required to pay quarterly estimated income tax payments to the IRS. If your income tax withholding is not expected to fully cover next year's tax liability, the IRS requires you to send in one-quarter of your liability every three months, typically by the 15th of April, June, September, and January. Although this process might seem confusing if you are newly self-employed, it is really quite simple. Figuring your quarterly estimated tax payments can be done in less than one hour by following the steps outlined below.

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Instructions

Difficulty: Moderately Easy

Things You’ll Need:

Calculator
Last year’s tax return

How to Pay Quarterly Taxes

Step1

Get out your calculator and your most recent tax return. Begin by locating and writing down your total tax and withholding amounts, which can be found on lines 62 and 63 of Form 1040.

Step2

Subtract the total tax figure from the withholding figure, and then divide the result by four. The amount of your quarterly payment should be one-fourth of the total amount of tax you paid to the IRS last year.

Step3

Adjust your figure up or down if you expect your income to increase or decrease significantly. It is important that you estimate both your self-employment tax and your regular income tax. You can calculate this amount by determining your average tax rate and adding that total to the self-employment rate of 15.3 percent. You should then multiply this percentage total by your quarterly net profit figure to calculate the amount of estimated tax you need to pay.

Step4

Mail your payment and Form 1040-ES to the IRS Service center. Your check should be made payable to "United States Treasury" and should include your SSN. Payments can also be sent via the Electronic Federal Tax Payment System, which is an online bill pay for federal taxes.

Step5

Keep a copy of your transaction, or print out a report of your payment to keep for your records.