November 22, 2020

Quarterly Tax Payments 2020

Quarterly Tax Payments 2020 hey guys so I am going to talk to you about estimate quarterly tax payments and this is for federal income taxes. For business owners because we are in a pay-as-you-go system here in the United States so if you have a w-2 employee job usually they you pay-as-you-go because your employer will withhold income taxes and, also your portion of the payroll taxes, which is Social Security and Medicare and they pay that you know usually every other week basically whenever they pay you they're paying the pail.

Taxes in short order thereafter but as a business owner the IRS, and government still wants you to pay you know throughout the year as you earn your income but they try to make it a you know they try to have another mechanism because, they don't have your employer you know I'm an employer take out the payroll taxes and this income taxes so they use quarterly estimated, tax payments and so if you have a sole proprietorship this counts for. Your self-employment taxes meaning Social Security and Medicare and you're paying the employee and the employer portion of that and, so let me see if I can have that pop up go quick let's see here okay okay so here we, go so Social Security is 6.2 percent for employee 62.2% for employer Medicare is one point four five percent for, the employee 1.45% for the employer so twelve point four percent for Social Security and two point nine percent for Medicare so overall at fifteen point three, percent we you get a little bit of a discount about, seven and a half or seven point seven point six five percent discount on that so really you're paying fourteen point one three percent and that's just, a social security so we haven't yet even talked about income taxes so just be aware that you know as your, business gets started up and growing it can very quickly thereafter. Have a big impact on your tax situation so and it's because you're paying both the employee and the employer portion of Social Security and you're paying your income taxes so if. You don't make these quarterly estimated tax payments and you all of a sudden have.

Kind of a bigger year or on your private sole proprietorship income.

It can come as a very rude awakening at the end of the year that oh my gosh boom I have all these taxes people often say. Well how much laid withholding taxes and I will. Say you know the first year or two it's very difficult to determine that but if you if you set aside 30 percent then you know you. Will have paid in a good chunk sometimes more than you need sometimes less after you get a year or two under your belt and we kind. Of see a consistent pattern of what the growth is where income taxes are going to fall out for the business then we, can start doing you know projections and give you a much better idea. Of on an annual basis here's how much you should pay quarterly as many income taxes but for now I would say. We're going to include with your income tax return if you so desire these quarterly estimated income tax payments and this is. I'm showing you a generic one that on an IRS Form but the one we send looks somewhat similar to, this but it's a little. Bit different you know I can't show you an actual one because it shows shows social security numbers so obviously for confidentiality purposes I can't show you, what our form is going to look like but you know it's going to have a top half it's going to have information. That's that's just for you it's going to say okay what was the date that you mailed it when. Was it you know how much did you pay yeah and what was the check. Number you used to pay it down here all of this I sent to you will come prepaid apprentice of your name social security number address now, it's gonna have the social security number of the person who's listed first on the federal income tax return so even if you're. It's the spouses business you know whoever is listed first on the on the income. Tax return that's the social security number that's going to go here and it will be credited to both both spouses and so you use, it you still use it for the business taxes now you're going to make the. Check out to the United States Treasury and up above here when I send you our vouchers it's going to have, the date that it's due and as you can see these are the due dates for the four right here April 15th 2019 June 17 2009 teen.

April 1st September 16 2019 in January 15 2020 but again this is paying income taxes and Social Security. Taxes and Medicare taxes you, know the self-employment tax paying all of that for the current tax here because we're doesn't pay as you go system so, again I kind of mentioned all of all of these taxes on top of this 14% if you're in a marginal bracket of say for you know 12% or 22%. Then all of a sudden we're talking you know this is if your net income so income after deductions if your net. Income was 50,000 you pay seven thousand sixty-five dollars, in Social Security and Medicare taxes those are what we call us the self-employment taxes and then if you're in the twenty two percent bracket you're gonna pay another 11. Thousand dollars so overall that's eighteen thousand.

Sixty-five dollars so this here assumes okay let's say this assumes seventy-five thousand dollars of gross revenues that means before.

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