Can I pay all my taxes by April 15 instead of quarterly?
While you can prepare and calculate self employment taxes in order to pay by April 15 the following year, you will likely be subject to penalties and interest for not paying Quarterly Estimated Taxes (QET).
Many freelancers don't understand this and end up paying more self employment taxes each year because of penalty fees they've accrued. To avoid this, it is always best to pay the estimated taxes every quarter to the IRS and state (if applicable).
You need to pay Quarterly Estimated Taxes if you fall into one of these categories:
- You expect to owe at least $1,000 in tax for the year, after subtracting your withholding and refundable credits.
- You expect your withholding and refundable credits to be less than the smaller of:
a) 90% of the tax to be shown on your 2021 tax return, or
b) 100% of the tax shown on your 2020 tax return. Your 2020 tax return must cover all 12 months.
Failing to pay QET properly will mean penalties on top of the taxes your owe. So, while you can pay all your taxes by April 15, it's probably not the best for your bank account.