Tax Refunds & Advice

As a self-employed professional, you are in charge of paying your federal, state, and local taxes. You and you alone need to keep a watch on your income in order to ensure that you are paying the proper amount each quarter. If you miss out and let this situation get out of control, you may find yourself in a bad position.

First off, you need to know how much you should pay each quarter. If you are unsure of how to figure this out on your own, hire a tax professional to assist you. They can offer an estimate based on your past year’s income while also supplying you with the necessary forms.

Take for example a self-employed professional who is paying quarterly taxes based on an annual income of $60k/year. If this person stays on pace earning $5k/month they do not have to change a thing as far as the amount that they pay in taxes each quarter. But if he begins to earn more money, say $10k/month, it is safe to say that paying more in taxes is in store. If you only pay taxes on $5k income per month but earn $10k, you are going to be well behind when your final return comes due.

There is no denying that knowing how much to pay in taxes is a difficult part of being self-employed. That being said, if you are organized and watch your monthly income you should be able to stay on the correct path. It should be your goal to not owe the IRS any money at the end of the year and to not receive a refund. If you break even it means that you were paying the proper amount in taxes each quarter.

When you are self-employed it means that you are in charge of organizing and paying your own taxes. This holds true on a federal, state, and local level. As you can imagine, the federal income tax that you pay is the same no matter where you live. But when you move to the state and local level, things can change quite a bit. If you are going to begin working as a self-employed professional, you need to set up your tax situation before you start to earn money.

The first thing that you need to know is that you will pay quarterly taxes on all three levels: federal, state, and local. Believe it or not, many people who are newly self-employed think that they only have to deal with federal income tax. Obviously, nothing could be further from the truth. Sure, you will pay the most in taxes on the federal level but this does not mean that you can forget about state and local.

For federal and state taxes, the payment dates are as follows: April 15, June 15, September 15, and January 15. If one of these days is a weekend or holiday, payment will be due the next business day. As you can see, although called quarterly payments, they are not spaced out accordingly. For this reason, you need to make sure that you know how much you are going to pay each quarter and then stick to a schedule.

Does all this sound too difficult to figure out on your own? If so, you can get on the right track by hiring a CPA. They will be able to answer your questions while also supplying you with quarterly payment forms as well as an estimate on how much you should send. This will allow you to have everything you need. From there, the only thing you have to do is make out a check and send it to the proper address.

If you are not sure of how your local tax system works, it is important to contact the tax collector in your municipality.

All in all, being self-employed means that you are now responsible for paying quarterly taxes on the federal, state, and local levels. Are you up for the challenge?

If you are self-employed you will be in charge of your day to day job, as well as administrative tasks that include keeping track of and paying taxes. Remember, this is a big part of working for yourself. There is no longer a human resources department that will take care of taxes for you by deducting the proper amount from each paycheck. Instead, you need to do this on your own. Are you scared yet? Don’t be! This is something that tens of thousands of Americans do each year with ease and success.

The most important thing to understand is that you will want to pay quarterly taxes. In other words, you will remit payment for both federal and state taxes on a quarterly basis or four times per year. To get setup, you will want to make an appointment with a certified public accountant or other tax professional. They will be able to explain this process to you, while also telling you how much you should pay in taxes based on the income that you are expecting.

One thing to remember is that self-employed professionals usually do not have a set income. For instance, you may be paying taxes each quarter based on an income of $5k. But if you begin to earn $7k/month, you need to adjust the amount that you pay as to avoid issues at the end of the year.

When it comes time to file your final return, this is when the help of a professional will really come in handy. They will be able to tell you if you paid enough throughout the year, while also working with you to lower your liability through deductions, etc.

The bottom line is simple: self-employed professionals need to keep close track of anything that has to do with taxes. This includes everything from paying on time each quarter to tracking deductions.