• If you own a business or opt for a low tax withholding rate on your paycheck, you may have to pay quarterly taxes to avoid an IRS penalty.
• The IRS allows you to pay your quarterly estimated taxes with an electronic funds transfer, debit card, or credit card online.
• Like everything tax-related, estimated taxes can be complicated. But there’s a simple way to pay enough to avoid penalties and interest.
• This article was reviewed for accuracy and clarity by Luis Rosa, an expert on Personal Finance Insider’s tax review board.
• See Personal Finance Insider’s picks for the best tax software »

Taxes are a fact of life for most Americans who earn more than $12,550 per year. But if you’re self-employed, have a side hustle, or have a low withholding rate on your paychecks, you might need to pay your taxes four times per year instead of the once-annual filing most full-time employed people have to manage. 

Income from

capital gains

, dividends, or distributions from your retirement account can also trigger an obligation to file estimated taxes, according to tax attorney Toby Mathis, a partner at Anderson Business Advisors. 

Filing your quarterly estimated taxes is a fairly simple and straightforward process. If you may owe $1,000 or more when you file in April, you’ll want to follow these steps to avoid penalties and make your quarterly filing as easy as possible.

How to pay quarterly taxes

Don’t let estimated taxes scare you. We’ve broken the process down into five simple steps that make paying quarterly taxes a breeze.

Step 1: Determine whether you’re required to pay estimated taxes

The first step in paying your estimated taxes is figuring out whether you need to file quarterly in the first place.

Types of income that may require you to make quarterly payments include:  

• Self-employment income, from a business you own or freelance work
• Contract work, including gig work or any job where you aren’t an employee with taxes withheld from your paycheck
• Dividends
• Capital gains
• Distributions from a retirement account
• W-2 wages, if you didn’t have enough tax taken out of your paycheck

Mathis notes that anyone who expects to pay more than $1,000 in taxes on all those income sources combined should plan to pay estimated taxes.If you meet these three conditions, the IRS doesn’t require you to …….

Source: https://www.businessinsider.com/personal-finance/how-to-pay-quarterly-taxes