Business owners, freelancers, independent contractors, and self-employed individuals are typically required to pay quarterly federal estimated taxes if they expect to owe $1,000 or more in taxes when they file their tax return.
If your business operates in a state that imposes income taxes and your income is subject to state taxation, you may be required to pay state estimated taxes as well. Each state has its own tax laws and requirements for estimated tax payments. Check with your state's Department of Revenue or taxation authority to understand the specific rules, deadlines, and forms required for state estimated tax payments.
If your new business is not yet making a profit, you do not need to make estimated quarterly tax payments.
There are cases when you may have to pay estimated quarterly taxes even if you are employed and your employer is withholding taxes from your paycheck. If you receive income from the following categories, you may have to pay estimated quarterly taxes.
- Interest
- Dividends
- Alimony
- Capital Gains
- Prizes or awards
If you have any questions about whether or not you should pay quarterly estimated taxes, schedule a call with your dedicated accountant. We would love to answer your questions.