No one likes paying taxes. Seriously, is there anyone out there who gets excited about forking over a chunk of their hard-earned money to the government? We didn’t think so. But of all the different types of taxes out there, estimated taxes might just be the worst.
What are Estimated Taxes?
If you’re a business owner, there’s a good chance you’ll be required to pay estimated taxes. But what exactly are they? Estimated taxes are basically advance payments on your income tax bill. The IRS expects you to pay estimated taxes if you expect to owe $1,000 or more in taxes for the year.
Who Has to Pay Them?
If you’re self-employed, a freelancer, or have any other source of income that isn’t subject to withholding, you’re probably going to have to pay estimated taxes. This includes things like interest, dividends, alimony, rent, gains from the sale of assets, prizes, and awards. Basically, if you’re making money from something other than a regular paycheck, there’s a good chance you’ll need to pay estimated taxes.
When Are They Due?
Estimated taxes are due four times per year: April 15th, June 15th, September 15th, and January 15th. So not only do you have to worry about paying them—you have to worry about paying them on time! Missing a payment can result in interest and penalties from the IRS, so it’s important to stay on top of things.
Paying estimated taxes sucks—there’s no two ways about it. But if you’re self-employed or have any other source of income that isn’t subject to withholding, chances are you’ll need to pay them. Just remember to make your payments on time—the last thing you want is to get hit with interest and penalties from the IRS!