It’s Estimated Tax Time!
We always want to make sure that we keep our awesome Shoeboxers prepared for tax time. And, it’s coming up! Yes, you read that right… Estimated taxes are due on June 15th. Read below for what you need to know:
What are estimated taxes?
The IRS requires that you pay your taxes as you earn money. For people who work for an employer, those taxes are taken out of their paychecks on an ongoing basis as “withholding tax.” But for self-employed people like you, you may need to pay estimated taxes each quarter to keep up-to-date with your tax bill from Uncle Sam.
Didn’t I just pay taxes?
This is the most confusing part, since the June 15th deadline for estimated taxes is only 2 months after annual taxes were due in April. We don’t know why the IRS does it this way, but your estimated taxes are due on: Q1 = April 17, 2012, Q2= June 15, 2012; Q3 = September 15, 2012; Q4 = January 17, 2013. Sorry, we’re just the messenger!
Do I have to pay?
Many freelancers and other self-employed people do have to pay. But, there are some complicated rules determining who pays and who doesn’t, based on your personal situation. Read this helpful article to discover the nitty-gritty details.
How much do I have to pay?
Because your Q2 estimated taxes are due before the end of Q2, the good news is that you only have to pay taxes on your profits for April and May – just 2 months worth of profits! If you have an accountant that you work with year-round, you should probably just ask them, and maybe learn a bit more about this whole “estimated tax” business.
Another alternative is using Outright, one of our partners. It only takes a few minutes to sign up for a free account and link your Shoeboxed and other business accounts to Outright. The tool will then pull together an overview showing an approximation of how much you should pay in estimated taxes.
Overall, don’t stress too much about estimated taxes! Using Shoeboxed and other resources such as Outright or your accountant will ensure that you are organized and ready for tax time in no time (no matter how many tax times Uncle Sam decides to throw your way).
The Shoeboxed Team