Q) Should self-employment taxes be paid quarterly or yearly?
A) Self-employment taxes should be paid quarterly. This is because the self-employed do not have their taxes withheld from their paychecks like employees do. If you wait until the end of the year to pay your self-employment taxes, you may owe a large amount of money, and you may also be subject to penalties.
To calculate your estimated self-employment taxes, you can use Form 1040-ES. This form is available on the IRS website. You can also use a tax preparation software program to help you calculate your estimated taxes.
You should make your estimated self-employment tax payments in four equal installments. The first installment is due on April 15th, the second installment is due on June 15th, the third installment is due on September 15th, and the fourth installment is due on January 15th.
If you are unable to make your estimated self-employment tax payments on time, you may be able to request a payment extension from the IRS. To request a payment extension, you must file Form 4868 with the IRS.
If you do not make your estimated self-employment tax payments on time, you may be subject to penalties. The penalty is equal to 0.5% of the amount of the underpayment for each month that the underpayment is outstanding. The maximum penalty is 25%.
You can avoid the penalty if you can show that you had reasonable cause for not making the payments on time.