Tax season is just around the corner, so people are advised to prepare their budget. Fortunately, there are tools available that can help estimate taxes and process paperwork online. These tools can be useful for self-employed people, freelancers, small business owners and other taxpayers.
Most traditional jobs deduct a percentage of income tax from employee wages. These companies then pay the federal tax on behalf of these employees. However, this system does not apply to self-employed taxpayers. These individuals are required to calculate and meet their tax payments themselves.
Note that taxpayers can pay their income on a quarterly basis. This is to reduce the burden of paying a lump sum on tax day. Network revealed some strategies for calculating estimated tax for self-employed citizens.
Do you need to pay estimated tax?
According to the IRS, anyone who earned at least $1,000 in 2021 must pay taxes. Some known types of jobs that fall under these categories are:
- Company shareholder
- Independent contractor
- sole proprietor
Be warned that source income for eligibility also includes people who earn:
- Dividends and interest earned on sales of investments
- Royalties for previous work
- Owner’s rental income
- Unemployment benefits
- Retirement benefits
- Social security benefits, if you have other sources of income
- Prizes and Awards
Thus, anyone in this category should prepare for this year’s tax deadlines.
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Estimated tax due date: calendar 2022
As mentioned earlier, taxpayers can pay their dues quarterly, on January 15, April, June and September. If the 15th falls on a holiday or weekend, taxpayers can file their tax return the next business day. Following this scheme, the deadlines for the estimated taxes for 2022 are:
- January 18
- April 18
- June 15
- September 15
- January 16
How to Calculate Estimated Taxes: Tax Calculator 2022
Taxpayers planning their budget can use two online tools for assistance. These are the Tax Withholding Estimator and the Estimated Tax Worksheet.
The IRS Tax Withholding Estimator will help people budget their taxes for a fixed salary, hourly job, or pension payment. The calculated amount prevents payers from paying too little and facing an unexpected bill on tax day. It will also take into consideration a change in status such as marriage, the birth of a child or obtaining a new home.
To use this tool, taxpayers must visit the IRS website. (NOTE: At the time of writing, the website is undergoing temporary maintenance. Services may return later this month).
The second tool is an estimated tax spreadsheet, which should be useful for taxpayers without a clear monthly income. It will give a rough estimate of a person’s tax payment based on their “threshold amount”. Details of this document can be found on the second half of this website.
After completing all these documents, taxpayers can register for the IRS.gov website to make and submit their payments.
Related article: Tax refund deadlines: 5 steps to follow to get your refund quickly!