Preparing for 3rd Quarter Estimated Tax Payments

As we approach the end of the third quarter, business owners and freelancers have a looming deadline: their estimated tax payments are due this week. Missing this deadline can lead to penalties and an unnecessary financial burden.

What Are Estimated Tax Payments? Estimated tax payments are required for individuals or businesses that don’t have taxes automatically withheld from their income. This primarily applies to self-employed individuals, freelancers, and small business owners. The IRS expects taxpayers to pay their taxes periodically, and the third quarter deadline is one of four crucial points throughout the year.

Why It Matters Paying estimated taxes on time ensures that you're not hit with a large tax bill at the end of the year, which could lead to financial strain. Missing this deadline can lead to interest and penalties from the IRS, which can be avoided with proper planning.

How to Calculate and Pay Many struggle with how to calculate these payments, but it’s straightforward with the right approach. Start by estimating your taxable income for the year. Factor in any deductions or credits, and use the IRS's Form 1040-ES to help guide your calculation.

What Happens If You Miss the Deadline? If you miss the payment deadline, you’ll likely face a penalty. However, there are ways to reduce or avoid penalties if you act quickly. Reach out to a tax professional to explore options if you find yourself in this situation.

Final Thoughts Don't let estimated taxes surprise you. With a little planning, you can avoid penalties and stay on top of your tax obligations. If you’re feeling overwhelmed, Tax Pros HQ is here to help ensure that your quarterly tax payments are accurate and on time.