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Better to pay quarterly or in April?

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newatsetax

New member
Hi, I'm still working to understand the self employment tax process.

I'm confused about some of the language....

Will you be fined if you don't make quarterly payments throughout the year as a self employed person? Or can you pay the full amount at the date in April?

Thank you!
 


adjusterjack

Senior Member

FlyingRon

Senior Member
The IRS wants you to make four equal payments, though they'll generally tolerate unbalances if larger sums occur later in the year. Some states (notably Virginia) are not so lenient. You owe interest on things not paid timely.
 

LdiJ

Senior Member
Basically, what you will have to deal with is under withholding penalties if you do not make quarterly payments. Those penalties are not necessarily high, but its still money that you would not have to pay if you made regular, quarterly payments.
 

FlyingRon

Senior Member
I had a pretty big windfall late one year. My business partner told me he intended to only make an estimated tax payment up to the point that the safe harbor provision covered. I was a bit nervous about going that far. I did make a Jan15 payment on it.
 

justalayman

Senior Member
i Don’t think the op provided state so I’ll mention my state of michigan

You are expected to make 4 payments. The amount you pay is based on actual income during the prior period (they aren’t equal periods of time). If you fail to make adequate paymemts, your interest and penalty is calculated on each improper payment and interest begins to accrue as of the inadequate payment.

It’s a pain in the ass to calculate because you can have calculations carrying forward from each improperly paid due date
 

davew9128

Junior Member
Will also point out that sometimes the state matters. For higher income taxpayers, California requires estimates based on current year income which basically requires annualizing.
 
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