As an entrepreneur, understanding and paying quarterly IRS business taxes is essential for keeping your business in good standing with the government. Quarterly taxes are estimated payments of income tax due based on your projected annual taxable income. By making these payments throughout the year, you can avoid owing a large sum that may be difficult to pay at once when filing your yearly return.

An Overview of Quarterly IRS Tax Obligations

When it comes to filing quarterly taxes, the IRS estimates your annual taxable income based on all of the income you earn in that period, including salaries, wages, bonuses, and other forms of compensation. You will then need to make estimated payments toward your federal taxes each quarter. The payment amount can vary depending on factors such as marital status, dependents, and other deductions. The IRS recommends that you make your payments by the 15th of the month following each quarter – April, July, October, and January – but there may be exceptions depending on when certain holidays fall within those months.

Self-Employment Tax

It’s important to note that if you’re self-employed or own a business, you may be required to pay the Self-Employment Tax (SE Tax), which is essentially Social Security and Medicare taxes combined. The rate for 2020 is 15.3% of your net earnings from self-employment, but there are certain deductions available that can lower your payment amount.

Maintain Accurate Records

Finally, it’s important to keep accurate records of your estimated payments. If you make quarterly payments that are too much or too little, the IRS will apply penalties or interest to the amount you owe when filing your yearly return.

In conclusion, understanding and paying quarterly taxes is an essential part of running a business. By planning and staying informed on current federal regulations, you can effectively manage your IRS business taxes and remain compliant with the government.