TAX TIPS: Make Estimated Tax Payments to Keep Money in Your Pocket

Why It Matters

Accurate estimated tax payments prevent costly penalties and improve cash‑flow for freelancers and small business owners.

Key Takeaways

• Estimated taxes apply to non‑W2 income like 1099 or business earnings.
• Calculate “leftover” tax after withholdings, then divide by four.
• Pay quarterly to avoid penalties and cash‑flow surprises.
• Safe‑harbor rules require 100% or 110% of prior‑year tax.
• Adjust payments with CPA to balance end‑year balance due.

Summary

The video explains how self‑employed individuals and 1099 earners should handle estimated tax payments, a requirement for anyone whose income isn’t fully covered by W‑2 withholding.

It walks viewers through calculating the “leftover” tax liability after subtracting any withheld amounts, then dividing that figure by four to determine quarterly payments. The presenter also highlights the safe‑harbor thresholds—100 % of last year’s tax for most taxpayers and 110 % for higher earners—to avoid underpayment penalties.

Key examples include the simple formula ‘leftover ÷ 4 = estimated tax payment’ and a warning that failing to make these payments can generate hundreds of dollars in penalties. The speaker advises consulting a CPA to refine projections and adjust payments throughout the year.

By following this method, freelancers and small‑business owners can smooth cash flow, eliminate surprise tax bills, and stay compliant with IRS rules, ultimately protecting their bottom line.

Original Description

www.advantagethroughaccounting.com

If your income doesn’t have taxes automatically withheld, the IRS still expects to get paid—just on a different schedule.

Estimated tax payments are how you stay current when you're self-employed, earning commission income, or generating profits from investments or real estate.

Here’s the simple idea:

Income creates tax.

If taxes aren’t withheld, you’re responsible for sending them in throughout the year.

Miss that, and you’re not just paying later—you’re paying penalties on top.

This video walks through the basics so you can stay ahead, avoid surprises, and keep more control over your cash flow.

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