Tax Tips Tuesday: Estimated tax payments due June 16 for self-employed taxpayers
By The Tax Institute At H&R Block
Poor financial management is among the top causes of small businesses closing within five years of opening; not knowing what’s due, to what organization and when can kill a small business. In addition to the annual tax return ritual, the self-employed must make quarterly estimated tax payments. The next payment is due June 16.
Generally, these tax payments are due on income received when income taxes have not been withheld. This includes not only self-employment income, but also interest, dividends, alimony, rent, capital gains, prizes and awards. For calendar year taxpayers, they are due mid-month in April, June, September and the next January.
If the tax owed exceeds $1,000 when tax returns are due, the taxpayer may be penalized. Taxpayers can be exempt from this penalty if withholding and timely quarterly payments total one of these:
- 100 percent (110 percent for higher-income taxpayers) of the amount calculated for last year’s return
- 90 percent of the balance due for the current year.
As an alternative, taxpayers who receive unexpected income may use the annualization method to calculate their payments and reduce or avoid this penalty.