Quarterly Taxes: What Side Hustlers Need to Know
Introduction
Do you make money outside a regular job? Whether you’re a freelancer, Uber driver, or online seller, you might need to pay quarterly estimated taxes. Many side hustlers don’t know about these payments until they get hit with a penalty. Here’s what they are and why they matter.
What Are Quarterly Taxes?
When you’re self-employed, taxes aren’t automatically taken out of your pay like they are from a regular job. The IRS wants you to pay taxes as you earn income — not just at tax time.
That’s why you may need to send in tax payments every 3 months. These payments cover your estimated income tax and self-employment tax for Social Security and Medicare.
Quarterly tax deadlines are:
- April 15
- June 15
- September 15
- January 15 (next year)
Who Needs to Pay?
You need to pay quarterly taxes if you expect to owe at least $1,000 in taxes when you file your return.
This usually applies if:
- You don’t have taxes withheld from paychecks
- You earn money from gigs, freelancing, or business sales
- You get 1099 forms (instead of W-2 forms)
Even if it’s just a part-time side hustle, you might still need to pay quarterly taxes if you make a profit.
How to Calculate Quarterly Taxes
To figure out your quarterly taxes, follow these steps:
- Estimate your total income for the year
- Subtract deductible expenses like supplies, mileage, and fees
- Calculate your estimated tax (income tax + self-employment tax)
- Divide the total by 4 to get your payment amount
This calculation can be tricky — especially if your income goes up and down each month.
Example of Quarterly Taxes
Let’s say you expect to make $20,000 this year from driving for Uber and selling on Etsy. After $5,000 in expenses, you have $15,000 in taxable income. You estimate $2,500 in taxes owed for the year. You’d pay $625 each quarter to cover it.
What Happens If You Don’t Pay?
If you skip payments or pay too little, the IRS can charge penalties and interest when you file your taxes. Even if you pay the full amount at tax time, you could still get hit with penalties for underpayment during the year.
Tips to Make Quarterly Taxes Easier
- Set aside a percentage of each payment you receive for taxes (like 25-30%)
- Mark the payment deadlines on your calendar
- Use a tax app or spreadsheet to track income and expenses
- Open a separate savings account just for tax money
Being organized helps you avoid surprises — and makes tax season less stressful.
How Wood Tax Advisory Helps You Stay Ahead
We’ll calculate your estimated taxes, remind you of deadlines, and help you avoid penalties. We’ll also make sure you’re claiming all your deductions so you don’t pay more than you owe.
Don’t wait until tax season — schedule your free consult today and stay on track with your taxes all year long!
