What are quarterly tax payments?
Quarterly payments are a method of paying tax on income that isn’t subject to tax withholding. If you work as an independent contractor or freelancer on a 1099, then taxes aren't taken out of the money you're paid. This means you're responsible for paying both your federal and state taxes.
Who needs to pay quarterly taxes?
Here’s the general rule of thumb: if you think you will owe more than $1000 in taxes for the year for your freelance or contract work, then you probably should pay quarterly taxes. You can calculate this number based on your expected income tax and self-employment tax. Or, if you made roughly $3000 or more in profit, then you can also expect to owe enough in taxes to consider paying them on a quarterly basis.
How much should you pay?
Catch can help you prepare for quarterly taxes, but it’s ultimately up to you to determine how much you owe. There are two forms that you can use to calculate and file taxes:
- 1040-ES: Use this worksheet for calculating exactly what you owe in quarterly taxes.
- Schedule C: Input your 1099 income plus any related expenses. This total is then subject to self-employment taxes, federal income tax, and state income tax. The Schedule C isn’t required for paying quarterly taxes, but it’s helpful to have.
Keep in mind, even if you make estimated tax payments, you may still owe taxes when filing your return at the end of the year.
When do you pay?
Here are the quarterly tax deadlines for income earned per year:
|IRS Due Date||Catch Deadline||What's Due|
|Apr 18, 2022||Apr 13, 2022||Q1 estimated tax (Jan-Mar)|
|Jun 15, 2022||Jun 10, 2022||Q2 estimated tax (Apr-May)|
|Sep 15, 2022||Sep 12, 2022||Q3 estimated tax (Jun-Aug)|
|Jan 17, 2023||Jan 11, 2023||Q4 estimated tax (Sep-Dec)|
How do I make payments?
There are three ways to submit your tax payment:
- Catch: Payment can be sent directly to the IRS from the funds you have saved in your Tax Plan with Catch. See above table for Catch cut-off dates. note: Catch will still attempt to make payments submitted after 5pm ET on the Catch deadline, but cannot guarantee they will be received by the IRS deadline.
- Electronic: Payment must be submitted by 8pm ET the day before the due date. This can be done via a system called EFTPS.gov.
- Physical Mail: Payment should be postmarked on or before the due date. First, print and fill out a 1040-ES form for the corresponding quarter (for example: September 15th would be the Q3 Voucher). Then write a check to the United States Treasury for the amount owed. Finally send it to the nearest IRS mail center.
If you're withdrawing from your Catch account to pay on your own, we recommend factoring in at least 3 business days for processing time.
What happens if you don’t pay?
If payments aren’t made quarterly when due, you may have to pay a penalty.