Freelance writers, actors, and consultants are among those who are typically defined as independent contractors. Tax help specialists say these self-employed individuals are required to pay estimated taxes on their earnings each quarter, unlike full-time employees who leave this filing task up to their employers. Here is a helpful guide on what estimated taxes are and how an accounting services firm can help with accurate and timely submissions.

What Are Estimated Taxes?

The IRS requires anyone who expects to pay more than $1,000 in taxes on their earnings to pay estimated taxes. Payments are also required if the total amount of their tax withholdings are expected to be less than 90% of an individual’s current year’s tax liability or 100% of the previous year’s tax liability.

Each quarter, individuals must calculate the total amount of earnings and estimate the amount of income tax that would be withheld. To calculate, tax help agents look at the total amount of taxes paid for the previous year and divide it by four. This provides the amount to be paid each quarter.

Self-employed individuals are not the only people who must submit estimated taxes. Household employers, farmers and fishermen, and certain higher income taxpayers are also required to make quarterly payments.

How Can an Accounting Services Firm Help?

Calculating estimated taxes can be complicated. Not paying enough can result in penalties from the IRS. An accounting services firm employs agents who specialize in accurate calculations. They know the IRS formulas to ensure their client’s payments are enough to submit each quarter.

Tax help specialists can also arrange reminder alerts so that payments are made by the designated deadlines in April, June, September, and January of the following year. The dates change each year. If the payments are not made, filers may have to pay a penalty when it’s time to file their income tax return. By working with a tax help professional, individuals will have peace of mind knowing they won’t incur hefty fines that can chip away at any refunds coming their way.

If you’re self-employed or an independent contractor, paying estimated taxes can save a lot of money, time, and frustration. Linda M. Shiraiwa, CPA, PS Inc. in Gig Harbor, WA, is the accountant clients continue to turn to for expert tax preparation services. With extensive experience in serving individuals, corporations, partnerships, and non-profits, she takes pride in providing personalized attention and impeccable income tax return filings. Should you ever need her tax help services, call (253) 858-6030 to schedule an appointment. Visit the website for information on the full suite of available services, including Quickbooks™ accounting and payroll.