So what are estimated taxes and why would you have to pay them? When you bring home a paycheck, your employer has withheld income taxes from your paycheck. But when you’re self-employed, a landlord, or even an investor, you are earning income that has never had taxes withheld. Rather than settling up all at once on April 15th, the government wants you to turn over 25% of your estimated tax liability at four points throughout the year. In fact, you will have to pay an “estimated tax penalty” if you fail to do so and owe Uncle Sam $1,000 or more when you do your taxes in April. So, start making those quarterly estimated tax payments and save yourself from all those nasty penalties!
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Deb Howard Greenleaf, EA, CEO and Principal, of Greenleaf Accounting Services provides virtual accounting and bookkeeping services and specializes in financial management to consultants, coaches, solo professionals, and other small business owners across the US. Deb is an Enrolled Agent (EA)—an IRS-licensed tax professional—and specializes in small businesses and entrepreneurs filing Schedule C or as an LLC. As an Advanced Certified QuickBooks ProAdvisor, Deb spends her day in QuickBooks Online and specializes in providing QBO support.