La Quinta, CA
(760) 895-3516

Tuesday, May 5, 2015

Estimated Tax Installment Payments for Self Employed

Estimated tax installment payments for self employed individuals and investors who do not receive W-2 income, but other sources of income (do not have income tax withheld from your pay) will have to file estimated income tax installment payments.

Determining How Much You Owe Quarterly

For these individuals who earn income that is not subject to withheld income tax, they must pay estimated tax installment payments on a quarterly basis. There are several methods to determine quarterly payment amounts.

The Quarterly installment payments are due:
  1. April 15
  2. June 15
  3. September 15
  4. January 15
These dates are adjusted for weekends and holidays.

Penalty for Missing Quarterly Installment Payment

For self employed individuals, there's a lot to remember. Taxes are easy to forget about so it is best to schedule direct withdrawals for your quarterly income tax installment payments so that you don't forget about paying them. This is done when you prepare your income tax return.

If you do not pay estimated tax installment payments by the quarterly payment due date, a penalty is imposed for not paying the quarterly estimated tax installment payment, or for paying less than 25% of the required minimum payment.

Underpayments for the final quarterly payment (January 15) are not subject to penalty if the individual files a tax return and pays the entire liability before the final quarterly payment is due.  

Overpayment of Tax Prior Years

An overpayment of taxes in the previous year (or prior years that were filed previously) in which there was not a refund for is considered a payment of estimated tax.

Borders Bookkeeping is an income tax preparer in the Coachella Valley, California. If you are self employed or receive income that does not withhold income tax, give us a call.

(760) 895-3516