### A Solopreneur’s Handbook for Quarterly Taxes
Being a solopreneur offers numerous advantages: you dictate your schedule, define your business objectives, and never need to stress over performance evaluations. Nevertheless, a single, uncomplicated tax season isn’t among these benefits.
Freelancers and independent workers typically are required to make tax payments in four installments during the year instead of settling everything in one payment by April 15. These payments, referred to as quarterly or estimated taxes, might appear overwhelming—but grasping the fundamentals (and debunking several widespread misconceptions) can simplify the process considerably.
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## What Exactly Are Quarterly Taxes?
The IRS mandates that freelancers, contractors, and solopreneurs remit taxes on their income throughout the year rather than postponing until tax season. With no employer deducting taxes from your paycheck, the IRS expects you to make periodic payments.
The due dates for quarterly taxes are as follows:
– **January 15**
– **April 15**
– **June 15**
– **September 15**
If any deadline coincides with a weekend or holiday, it automatically shifts to the next business day.
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## Who Is Required to Pay Quarterly Taxes?
If you expect to owe $1,000 or more in taxes on your non-W-2 income over the year, you probably need to make quarterly payments. (If you’re uncertain, online tax estimators—like [H&R Block’s calculator](https://www.hrblock.com/tax-calculator/)—can assist in gauging your tax obligations.)
Non-W-2 income encompasses self-employment income, which is prevalent among solopreneurs. Per the [IRS](https://www.irs.gov/businesses/small-businesses-self-employed/estimated-taxes), “If you operate your own business, you generally need to make estimated tax payments.”
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## How to Calculate and Remit Quarterly Taxes
If you’re liable for quarterly taxes, how can you find out the correct amount to pay? This can be challenging, especially if your income varies during the year. Here are three popular methods:
### **1. Percentage-Based Method**
Allocate a percentage of your earnings each quarter and remit that figure. A general guideline is about **30%** of your income, or you may opt for your **effective tax rate** from the prior year. Should you overpay, a refund will be issued when you submit your tax return.
### **2. Prior Year Safe Harbor Method**
With this method, you won’t incur underpayment penalties if you pay at least the same amount in taxes as you did in the previous year. Simply take last year’s total tax liability, divide it by four, and pay that every quarter.
**Note:** If your income has dramatically risen, this approach could result in a significant tax burden at year-end.
### **3. Annualized Income Method**
At the conclusion of each quarter, sum your earnings, multiply by four to forecast your annual income, and estimate your potential annual tax liability. Divide that total by four to ascertain your quarterly payment.
Once you have computed your payment, you can either submit it via the [IRS Direct Pay portal](https://directpay.irs.gov/directpay/payment?execution=e1s1) or choose to mail a check if you prefer a more traditional method.
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## Business Deductions for Solopreneurs
As a solopreneur, you can deduct expenses that are deemed “ordinary and necessary” for your business, including:
– Home office expenses
– Mailing and shipping costs
– Business-related travel expenditures
### **How Deductions Reduce Your Tax Burden**
For instance, if you earned **$8,000** as a [Depop seller](https://mashable.com/deals/how-to-sell-clothes-online-depop) but incurred **$1,000** in shipping, packaging, and travel expenses, that $1,000 is deductible. Consequently, instead of being taxed on $8,000, you’ll only face taxation on **$7,000**—thereby decreasing your overall tax responsibility.
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## Quarterly Tax Strategies
### **1. Be Mindful of State Taxes**
If your state imposes an income tax, you may also need to remit quarterly state tax payments. Tax regulations differ by state, so ensure you research your state’s requirements to evade an unexpected bill.
### **2. Maximize Potential Deductions**
Leveraging deductions can significantly diminish your tax liabilities. If you’re uncertain about what qualifies, seek advice from a CPA or utilize tax software like TurboTax. Applications such as [Keeper](https://www.keepertax.com/) and [FlyFin](https://flyfin.tax/) can also assist in monitoring deductible expenses throughout the year.
### **3. Maintain Organized Bookkeeping**
Quarterly tax payments can streamline tax season, but only when you keep precise records. Track your