Quarterly payments could help lessen impact come tax time

The IRS offers online payment options
Published: Jul. 21, 2022 at 2:56 PM CDT
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InvestigateTV - Taxes are due whenever you earn or receive income. You can pay them by withholding money through paycheck deductions or you can make quarterly estimated tax payments.

Freelancers, independent contractors, and small-business owners who expect to owe at least $1,000 in taxes from their self-employed income are required by the IRS to make estimated tax payments.

Retirees dealing with lump sums of money may also need to make an estimated tax payment.

Michael Joyce with the financial firm Agili explained at the beginning of the tax year in 2023, you can make your first three quarterly payments on April 15th, September 15th, and January 15th, 2024 before wrapping up on Tax Day in 2024.

“You can set up an online account at IRS.gov and make payments that way. Or you could just fill out a voucher, which basically just has your name and how much you’re paying in and your tax ID number,” said Joyce.

To calculate your estimated taxes, add up your total tax liability for the current year, including self-employment tax, individual income tax, and any other taxes and divide that number by four.

Joyce said make sure you withhold enough money, or you might have to pay a penalty.

If you are unsure if need to pay estimated taxes, the IRS webpage has a detailed section describing who needs to pay and how.