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A guide to quarterly tax filing for the self employed

Most people agree: filing taxes is complicated. Back when you worked for Corporate America, it wasn’t too bad. Your employer sent you your W-2, you copied that information over to your 1040, and most of the math was done for you.

Then you took the leap. You started your own business, and now you’re your own boss. Good for you! But now you have to grapple with the enigmatic task of filing your taxes as a self-employed person. What are you in for?

The first thing you should know is that as a self-employed person, you may need to file your taxes every quarter. In general, if you have employees and pay wages, you need to file taxes on a quarterly basis; if you’re a solo act, when you file is more at your discretion.

As your own boss, the other thing you’re on the hook for is self-employment tax. Self-employment tax is a percentage of your income from self employment that goes toward social security and Medicare taxes. That percentage is currently at around 15 percent—a considerable chunk of your annual earnings.

This means that even if you’re not required to file your taxes quarterly, it can still be a smart thing for you to do in the long run, because paying your taxes quarterly saves you from one painfully high tax payment annually. You can also avoid paying penalties and interest in April by paying quarterly.

When you file as a self-employed person, you’ll usually need to file these forms:

  • Schedule 1040C: used to report your company’s profit or loss
  • Form 941: used to report income taxes, social security tax or Medicare tax withheld from your employees’ income , as well as social security and Medicare tax you paid
  • Form 720: used to report excise taxes, such as fuel, communications, and manufacturer taxes

Still overwhelmed? You can always save yourself the hassle and hire a professional to file your tax returns for you.

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