A Guide to Quarterly Taxes and 2023 Deadlines
Updated: Jun 15, 2023
As a small business owner, it's essential to understand what quarterly taxes are, who has to pay them, and what the deadlines are. The income tax system is a pay-as-you-go system. This means that taxes are paid as income is earned. Most individuals pay taxes as they earn income by having their employers withhold taxes from their paychecks and sending the payments directly to the IRS on their behalf. However, for self-employed individuals, freelancers, and business owners who are not subject to regular payroll tax withholdings, quarterly tax payments are required by the IRS.
Who Needs to Make Quarterly Tax Payments?
If you are self-employed, a freelancer, a contractor, or a small business owner, and you expect to owe $1,000 or more in taxes for the year, you are generally required to make estimated quarterly tax payments. If you are a salaried employee, you do not need to make quarterly tax payments because your employer withholds taxes from your paycheck throughout the year.
How Much Do You Need to Pay?
To calculate your quarterly taxes, you need to estimate your income and deductions for the year. You can use last year's tax return as a guide or estimate your income based on your current earnings. Then, subtract any deductions or credits you expect to qualify for to arrive at your taxable income. In short, the amount you need to pay depends on your income, deductions, and credits. You can use the IRS Form 1040-ES to calculate your estimated tax liability for the year and determine your quarterly payments. You can also contact us at CPA by Choice for assistance.
When Are Quarterly Tax Payments Due?
1st Quarterly Estimated Tax Payment
April 18, 2023**
2nd Quarterly Estimated Tax Payment
June 15, 2023
3rd Quarterly Estimated Tax Payment
September 15, 2023
4th Quarterly Estimated Tax Payment
January 15, 2024
**Note that the first quarter deadline is different from the usual April 15 deadline because April 15 falls on a weekend in 2023, and Monday, April 17, is a holiday in the District of Columbia.
What Happens If You Don't Make Quarterly Tax Payments?
If you don't make quarterly tax payments, you may be subject to penalties for underpayment and interest on the unpaid taxes. To avoid these penalties, it's important to make timely and accurate quarterly tax payments. Sage online accounting software not only simplifies and automates basic accounting tasks, it also provides real-time business insights—anytime, anywhere. Sage delivers automatic quarterly upgrades—no business disruption, no costly hardware upgrades.
Estimating and paying quarterly taxes can be complicated, but it is mandatory for self-employed individuals and small business owners. By understanding what quarterly taxes are, when they are due, and how to calculate them, you can stay on top of your tax obligations and avoid potential penalties and interests. You have many choices when filing your taxes, including using a trusted tax professional like us. At CPA By Choice, we can help you calculate your quarterly payments and apply every possible deduction you qualify for in order to reduce your tax liability and quarterly payments. We are available to answer your questions, feel free to call us or send us a message.