What are Estimated Taxes and Who Needs to Pay Them?
Many taxpayers we deal with in our practice in Winchester, VA. Charles Town, WV and Martinsburg, WV encounter tax issues because they do not pay enough taxes during the year. Paying Estimated Taxes is especially important for self-employed taxpayers who own small businesses. It is important to note that anyone who is getting paid on a 1099-Misc (and not a W2) is considered an independent contractor and is self-employed. If you have ever been paid on a 1099-Misc, you probably know that there are NO taxes withheld. Even if you don’t think you are self-employed; if you get a 1099, you are self-employed in the eyes of the IRS and for tax purposes. Since no taxes are withheld, it is your responsibility to pay your Estimated Taxes on a quarterly basis.
If you do not pay your Estimated Taxes during the year, you run the risk of having a significant tax bill when you file your tax return at the end of the year. A tax bill you may not be prepared to pay. We see this all the time in our tax practice…read more