“To file quarterly, or not to file quarterly, that is the question.” It can be mentally exhausting trying to figure out all the loopholes of filing taxes. ESPECIALLY, when you don’t know the rules. But don’t panic! Take a deep breath, it will be okay.
In order to figure out if you need to file quarterly taxes, let’s first understand the difference between yearly and quarterly taxes.
WHAT’S THE DIFFERENCE BETWEEN YEARLY AND QUARTERLY TAXES?
Well, when you’re hired by a company, you fill out paperwork including a W-4. That W-4 let’s your employer know how much taxes to withhold from each paycheck. At the end of the year, you receive a W-2 which shows the amount of taxes held for that year including Federal Taxes (Social Security and Medicare) and State and Local Taxes. This is what you need to file your yearly taxes, among other things, to help balance out the tax scale.
However, anyone who is self-employed such as a freelancer, independent contractor or small business owner doesn’t have any taxes withheld during the course of the year. Therefore, they are not paying into any Federal, State and Local Taxes.
Now, one could only hope that as an independent contractor and/or small business owner, business is booming and the money is rolling in. But with more money comes greater responsibilities! The chances of you having to owe the government more than $1,000.00 in taxes greatly increases.
This is where quarterly taxes come in.
April 15th — taxes due on earnings from January 1 – March 31;
June 15th — taxes due on earnings from April 1 – May 31;
September 15th — taxes due on earnings from June 1 – August 31;
January 15th — taxes due on earnings from September 1 -December 31.