Quarterly Tax Filing
Do I need to file quarterly?
Yes, if you are a self-employed sole proprietor who files Schedule C as part of your personal return, you may be required to make quarterly estimated income tax payments via Form 1040-ES. This is probably what you have heard about when people talk about "filing quarterly taxes".
The purpose of these payments is to comply with our federal "pay as you go" tax system. The payments are for both federal income taxes as well as self-employment taxes. Failure to make these payments can result in a penalty for underpayment of estimated tax payments, even if you pay your balance due with your return on April 15. Be sure to determine whether you must make quarterly estimated tax payments.
Quarterly Tax Return Due Dates:
April 15, for January 1-March 31
June 15, for April 1-May 31
September 15, for June 1-August 31
January 15, for September 1-December 31
Why are 2nd quarter taxes due in June, not July, making it only a 2 month quarter?
Basically, the federal government doesn’t have a Gregorian calendar year budget; their fiscal budget ends September 30th, so in order to start their fiscal year, on October 1st, with a cash influx, they adjusted the due dates of 2nd and 3rd quarterly estimated taxes.
Here’s a longer explanation (caution: it made my brain hurt): https://www.quora.com/Why-is-the-second-quarter-of-estimated-quarterly-taxes-only-two-months
This also means the 3rd quarter is 4 months long, so your 2nd and 3rd quarter estimated taxes may be higher numbers than the 1st and 4th depending on your sales flow throughout the year.
You do have the option of paying equally throughout the first 3 quarters of the year, knowing your 4th quarter payment will probably be higher to include all remaining taxes due.
Still have a headache?
That's okay, we did too when first learning the language of tax documents, forms and instructions. If you don't feel comfortable handling this part of your bookkeeping, we do and would love to create ease in this area of your business. Please reach out to us [HERE] to start the conversation, 'How may we help you?'