It’s no secret that if you’re self-employed you have to pay estimated tax payments every quarter. This is probably one of the least favorite tasks that business owners have to do. But it has to be done! No one wants the IRS on their backs or to end up with a large tax bill every year.
Before paying your taxes though, you must first know when these quarterly tax payments are due. #duh
So, here are the dates for when IRS estimated tax payments are due in 2017:
- 1st quarter – April 18, 2017
- 2nd quarter – June 15, 2017
- 3rd quarter – September 15, 2017
- 4th quarter – January 16, 2018
Now that you know when your IRS estimated tax payments are due, you can choose one of the following methods to pay them on time.
3 ways to pay estimated tax payments
There are actually 3 main ways to pay estimated tax payments. Each one has pros and cons but all of them do a great job of accomplishing what needs to be done. It just depends on your preferences and how much time you want to spend.
1. Send in a payment via snail mail
This is a tried-and-true method that’s still accepted today. Simply head over to the IRS website and print off Form 1040-ES. Scroll down to the bottom and locate the estimated tax payment vouchers. Choose the correct one to mail in with your check. They are numbered and dated according to each quarterly tax due date (listed above).
Write out your check payable to United States Treasury for the amount of your calculated estimated taxes. Be sure to include your Social Security or Tax ID and current tax year is in the memo area of the check. This will help process your payment more quickly.
I also suggest sending in your 1040-ES voucher and payment using a tracking number or signature confirmation. That way you can be sure that your mail doesn’t get lost or stolen on the way to its destination.
2. Register with the EFTPS
In the event that you prefer to use a more updated tax payment method, you can pay using the U.S. Treasury Department’s online portal. The Electronic Federal Tax Payment System (also known as EFTPS) requires registration and you have to set up a PIN. This information is mailed to you and can take 10 days to set up.
It also looks like the website was built in the nineties. HA!
It’s a bit faster than the snail mail method but not nearly as quick as the final option (mentioned below). In any case, I’ve used the EFTPS in the past for payroll clients and small businesses. So it may make sense for you, if you’re willing to take a bit longer to get set up in their system.
The cool thing is you don’t have to input your information each time, and you can set up recurring payments for estimated taxes and payroll taxes (if you have employees).
You can also log into your EFTPS account throughout the year and access saved reports showing past payments. This can be very helpful during tax time as record of payments made.
Not sure how to calculate estimated taxes every quarter? Learn how Painless1099 can do this for you!
3. Use the IRS Direct Pay service (recommended)
By far the easiest way to pay estimated taxes online is using the IRS Direct Pay service. This is completely free and is the method I use to make my payments every quarter.
It only takes a couple minutes to fill in your name, address, Social Security number, filing status, tax year for payment and the reason for payment (which is estimated tax).
Then, securely input your banking information and schedule when you’d like the payment to be withdrawn. Using your business checking account is free, but if you’d like to pay with a credit card, there will be a 2.9% convenience fee.
I use Digit to set aside money into a tax savings account every month and simply withdraw the amount I need to make estimated tax payments every quarter. I transfer this amount into my business checking account and set up the payment date using the IRS Direct Pay service. Easy peasy!
Simply follow the steps outlined below to quickly and securely pay estimated tax payments online.
5 steps to pay estimated tax payments online
This is a quick and secure 5-step process. Start by clicking over to the IRS Direct Pay site. Here’s a screenshot of what the page will look like.
Next, you’ll be taken to a page where you can provide your tax information. Start by selecting the type of payment (1040ES) and then the reason for payment (estimated taxes). Finally you’ll choose the tax period for the payment, which is the current year.
The second step involves verifying your identity by using previous tax year info. Select the tax year you want to use to identify your info. It’s easier to use last year’s as it’s probably fresh in your mind.
Choose that year’s filing status and the tax period for that year. Continue inputting your personal information (name, social security, etc) and then click the Privacy and Paperwork Reduction Act box.
This next part is where you’ll enter your estimated tax payment information, using your business or personal checking account. Fill in the payment amount, then confirm and input the date you want the payment to be made.
Your banking information is next, so you’ll need your bank’s routing and account numbers (found on the bottom of your checks). Review the figures and dates to make sure it’s all correct.
Next you’ll review your payment and electronically sign the form using your name and Social Security number. Be sure all the fields look correct as there’s no going back after you move forward. Click the “Accept Debit Authorization Agreement” box at the bottom. Then click “submit” to finalize your estimated tax payment.
The last step is a pretty simple but a very important one. Print and save your confirmation page! You want to keep this with your other tax documents so you have a record of the estimated tax payments you made throughout the year. Keep the payment confirmation number in a folder on your computer or other safe place.
That’s it! You’re finished with your quarterly estimated taxes and are all set until the next payment is due. If you need more guidance on paying self-employed taxes or want a checklist to get started, check out my free Tax Toolkit!
It will show you how to estimate your taxes and how to get the most tax savings from all your tax deductions. And did I mention it’s free! So what are you waiting for?
Click here to sign up for my free Tax Toolkit for the Self-Employed.
Got questions related to estimated tax payments or deductions? Leave a comment!