Quarterly tax payments made by self-employed individuals to cover income and SE tax.
Since self-employed income doesn't have taxes withheld, you're required to make estimated tax payments quarterly if you expect to owe $1,000 or more. These payments cover both federal income tax and self-employment tax. Missing payments or underpaying can result in penalties.
If you expect to owe $12,000 in taxes for the year, you'd make four quarterly payments of $3,000 each.
You may owe an underpayment penalty when you file your return. The penalty is calculated based on how much you underpaid and for how long.
Pay at least 100% of your prior year's tax liability (110% if AGI was over $150,000)/or 90% of current year tax through quarterly payments.
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