Bookkeeping service-Estimated Tax Payment

The income and expenses of a self-employed person, small business owner, freelancer, or independent contractor during the year may not always turn out exactly as planned. You may be having an unexpected banner year and need to increase your quarterly payments, or maybe your business is taking longer to get up to speed than you hoped, and you may not need to pay as much as you thought. Let’s look at how you can adjust your self-employed estimated tax payments to prevent underpaying or overpaying your income tax and self-employment tax during the year. If you estimate your quarterly tax liability very carefully, you may need to pay a slightly different dollar amount each quarter. To make sure you pay the right amount of estimated taxes, the most important thing is keeping up with your bookkeeping every quarter — not just at the end of the year.

For instance, if you overpaid in tax the previous year and anticipate making roughly the same amount this year, you might be able to lower your estimated tax payments this year. if you overpay during a quarter, you can’t get that extra money back from the IRS until you file your income tax return. This is one reason why getting your estimated tax payments right is so important. However, if you greatly overpay one quarter, you may be able to skip the following estimated tax payment altogether. if you paid enough in the first quarter to cover both the first and second quarters, you won’t be penalized for not sending a second-quarter payment. Meticulous bookkeeping will help you avoid overpaying or underpaying, so you aren’t stuck waiting for a tax refund all year or with a big tax bill when you file your federal tax return. Schedule consultation with TaxEasy now for bookkeeping