Estimated tax payments can be confusing. It’s easy to say, “I’d rather just pay them all at once, so I’ll wait until tax time next year to do them.” But missing those payments can be costly for your business, and no small business owner has time for extra expenses right now. What Are Estimated Tax Payments and Who Pays Them? Estimated tax payments are something every small business and self-employed individual has to worry about. Because income taxes and others are not automatically taken out of these types of employees’ paychecks, the amounts that the business or individual will need to pay is estimated, and then paid quarterly throughout the year. Typically, sole proprietors, partners, and S corporation shareholders are responsible for paying estimated tax, if they expect to owe tax of more than $1,000 (or $500 for corporations) when their return is filed. This includes any income that isn’t subject to withholding tax, like interest, dividends, capital gains, business earnings, and more. Estimated Tax payments are made quarterly, on or around the 15th of January, April, June, and September of each year. Here are the 2022 due dates: April 18, 2022 June 15, 2022 September 15, 2022 January 17, 2023: Please note that you do not have to make the last January payment if you file your 2022 tax return by January 31, 2023, and you pay the entire balance due with your return, according to IRS Instructions. You do not have to pay estimated tax if you meet all three of the conditions below: You had no tax liability for the prior year You were a U.S. citizen or resident for the whole year Your prior tax year covered a 12-month period Why Should I Keep Up with Estimated Tax Payments? The taxes that are applicable to this rule include things like federal income tax (ranging anywhere from 10 to 37%), state and municipal tax (typically between 0 and 14%), and self-employment tax. Many businesses lose their way during this part of the …
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