Navigating Quarterly Taxes: Your September 15th Deadline Reminder

As a responsible taxpayer, it's crucial to understand and stay on top of quarterly taxes. These payments ensure that you meet your tax obligations throughout the year and avoid penalties come tax season. With the next deadline swiftly approaching on September 15th, let's delve into what quarterly taxes are and offer a friendly reminder to mark this date on your calendar.

Understanding Quarterly Taxes

Quarterly taxes, also known as estimated taxes or quarterly estimated tax payments, are periodic payments made by individuals and small business owners to the IRS and state tax agencies throughout the year. They are typically due in four installments, with the deadlines falling on:

1. April 15th (for income earned in January, February, and March)

2. June 15th (for income earned in April and May)

3. September 15th (for income earned in June, July, and August)

4. January 15th of the following year (for income earned in September, October, November, and December)

These payments are designed to cover your income tax liability on a quarterly basis, ensuring that you don't face a massive tax bill when you file your annual tax return.

Who Needs to Pay Quarterly Taxes?

1. Self-Employed Individuals: If you're self-employed, a freelancer, or a gig worker, you likely need to make quarterly tax payments because you don't have taxes withheld from your income.

2. Business Owners: Small business owners, including sole proprietors, partners, and S corporation shareholders, are generally required to make quarterly payments on both their income and self-employment taxes.

3. Investors and Retirees: If you receive significant income from investments, such as dividends, interest, or capital gains, or if you're retired and no longer have taxes withheld from a paycheck, you may need to make estimated tax payments.

Why Quarterly Taxes Matter

Paying quarterly taxes is essential for several reasons:

1. Avoiding Penalties: Failure to make quarterly tax payments, or underestimating your payments, can result in penalties and interest when you file your annual return.

2. Budgeting and Cash Flow: Quarterly payments help you budget for your tax obligations and ensure you have enough cash on hand to cover your tax bill when it's due.

3. Minimizing the Year-End Crunch: By spreading your tax payments throughout the year, you avoid the stress and financial strain of a large, lump-sum payment during tax season.

As the September 15th deadline approaches, here's a friendly reminder to review your financial records, calculate your estimated tax liability, and make your payment promptly. Missing this deadline can result in penalties and interest on any underpaid amounts.

To determine your estimated tax liability, consider working with a tax professional or using tax preparation software. They can help you accurately calculate your payments based on your income, deductions, and credits.

Remember, staying on top of your quarterly tax payments is not only a responsible financial practice but also a way to ensure smooth sailing when tax season rolls around. Mark these dates on your calendar and take proactive steps to meet your tax obligations—your financial future will thank you.

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Cassandra Smalley, CFA, CFP® is a fee-only financial advisor for women business owners and high-achieving professionals located in St. Petersburg, FL, and works virtually with clients across the US.