Year-end gets all the income tax deadline attention for business spending to get deductions, and April 15 gets even more spotlight as the income tax filing deadline.
Ignoring quarterly estimated taxes for your operation can be a costly move.Yet for those who are self-employed, there are three other dates (four, counting April 15) that are important enough that the IRS can penalize you if you ignore them. These are the quarterly estimated quarterly filing deadlines. The first one of 2020, reflecting the final months of 2019, is Jan. 15.
Owner-operators, especially independents, know that cash flow can dry up at inopportune times. Owner-operator financial services provider ATBS recommends that operators set aside between 25 and 30 percent of their weekly net income to ensure that quarterly taxes can be paid.
Anyone who gets income that is not subject to withholding is required to ante up quarterly if you expect to owe at least $1,000 in taxes for the year. Fail to do so and the Internal Revenue Service will charge not only a penalty, but also interest on the unpaid amounts.
A good trucking accountant should be helping you with the estimated income and the filing. But if you need to do it yourself or simply want to understand the tax better, here are some other basics:
- Use Form 1040-ES to pay your estimated tax. This applies if you are filing as a sole proprietor, partner, S corporation shareholder or a self-employed individual.
- Pay a fourth of one of these two amounts: 100 percent of what you paid in taxes last year or 90 percent of what your records indicate you will owe for 2019.
- Federal estimate tax can be paid online at gov. For estimated state tax payments, check your state’s department of revenue website.
- Here are the future deadlines for filing quarterly estimated tax, which do not always conform to three-month quarters: April 15 (for payment Jan. 1 to March 31), June 15 (for April 1 to May 31), Sept. 15 (for June 1 to Aug. 31) and Jan. 15 (Sept. 1 to Dec. 31).
