As the number of self-employed increases, you’ll more than likely increase your self-employed client base. Whether your clients are contractors, freelancers or on-demand workers, you can provide value by helping them simplify their quarterly taxes. As a reminder, your self-employed clients need to pay estimated taxes, and the upcoming third quarter estimated tax deadline is coming up on Thursday, Sept. 15.
Here are a few tips to help you provide extra value to your self-employed clients around this deadline.
Which of my Clients are Subject to Estimated Taxes?
Since we have a “pay as you go” tax system in the United States, the government expects to receive most of your taxes, including self-employment taxes, throughout the year instead of at year end. Your clients who are employees have taxes automatically withheld from their paychecks throughout the year, but your self-employed clients most likely don’t. For this reason, your self-employed clients are expected to pay estimated taxes if they expect to owe $1,000 or more in taxes.
When are Estimated Taxes Due?
The good news is the IRS has a schedule to help you figure out when your clients’ estimated taxes are due:
- 1st quarter (Jan. 1 – March 31): April 18, 2016
- 2nd quarter (April 1 – May 31): June 15, 2016
- 3rd quarter (June 1- Aug. 31): Sept. 15, 2016
- 4th quarter (Sept.1 – Dec. 31): Jan. 17, 2017
Note that if the 15th falls on a weekend or a holiday, then the due date is the next weekday.
How Do You Calculate Estimated Taxes?
If your clients use QuickBooks Self-Employed for their business, the program does the math and helps your clients figure out their estimated taxes so that they can easily make the estimated tax deadline. At the end of the year, QuickBooks Self-Employed provides a P&L statement and a tax detail report that you can use for quick and easy Schedule C tax preparation. Click here to read an accountant’s review of QuickBooks Self-Employed and learn more of the benefits, or click here to test drive the software.
How Can I Help My Clients Pay Estimated Tax Payments?
Now that you know what your clients owe, it’s time to help them make their payments:
- Your clients can pay their taxes using the Electronic Federal Tax Payment System (EFTPS), which enables your clients to instantly make free payments.
- Your clients can mail in their payment. The IRS has specific mailing addresses based on the state where your client lives. Please be aware that payments should be postmarked by the due date to avoid penalties.
- Form 1040-ES Vouchers and Instructions
In addition, be sure you maintain a record of all your clients’ estimated tax payments — you will need to enter the estimated taxes your client paid when you prepare their taxes next season!