Did not pay quarterly estimated taxes!
With more freelancers than ever before, this also means more taxpayers will be required to pay quarterly estimated taxes for the tax year. Unfortunately, some people are not aware they have to do this, or don’t know how and when to make their payments.
What are the consequences?
A failure to pay quarterly estimated taxes does a couple of things.
- It leaves the taxpayer with a massive tax bill come April.
- It can trigger late fees and interest on top of the base tax figure. For high earners, this could amount to thousands of dollars in additional taxes.
The IRS has a pretty good resource on self-employment and how to pay taxes. It explains who is required to pay quarterly taxes, how to make the payments, when to submit the payments, and how these payments impact the annual return. Freelancers and self-employed professionals should read it to ensure they don’t run into problems come April.