This One Simple Move Helps Me Avoid IRS Penalties as a Self-Employed Worker

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As a busy writer, it’s important to find ways to save time while meeting my responsibilities. Read on for an easy trick to avoid penalties from the IRS. 

One of my favorite things about being self-employed is getting to set my own working hours. As a mom of three young kids, that’s crucial. But it also sometimes means having to work at 6:00 in the morning or 10:00 at night to make sure I’m meeting my deadlines and keeping up with my income and savings goals.

Clearly, my schedule is busy, and I don’t always have time to do things like sit down and pay bills. That’s why I try to automate as many of mine as possible.

Meanwhile, because I’m self-employed, I owe the IRS money four times a year in the form of estimated taxes. And I’m well aware that being late with an estimated tax payment could result in interest and penalties, which I don’t want. That’s why I employ one easy trick — with my accountant’s help — to make sure my estimated quarterly tax payments go out on time.

It pays to set up your tax payments in advance

Estimated tax payments for self-employed individuals are due four times a year: in April, June, September, and January. Usually, they’re due on the 15th of the month, or whatever the next business day is after the 15th if it falls on a weekend or holiday.

This year’s estimated taxes are due as follows:

April 18June 15Sept. 15Jan. 16, 2024

And if you’re wondering why that final tax payment isn’t due on Dec. 31, it’s because many people get paid at the very last minute, and the IRS recognizes that making a same-day tax payment may not be feasible for everyone. As such, they give people who are self-employed a couple of weeks to reconcile those December earnings and figure out their final quarterly tax payment for the year.

I could send the IRS money every few months on or around these deadlines, but that would require me to remember to do so and actually have the time. Since I’ve learned that my schedule is hectic, a much better solution for me is to have my accountant try to figure out how much money I should pay the IRS on a quarterly basis, and then set those payments to go out automatically in conjunction with finishing up my tax return.

In fact, what I’ll usually do is work with my accountant in the spring to complete my tax return, and in conjunction, we’ll set up my four estimated quarterly tax payments for the year. That way, the money is debited from my bank account every few months and I don’t have to think about it.

A move worth making

It’s not always easy to calculate your estimated quarterly tax payments in advance, so if you’re going to do what I do, I highly recommend enlisting the help of a seasoned accountant to help with those numbers. But all told, automating my quarterly tax payments is instrumental in helping me avoid penalties. And since I don’t believe in paying the IRS a dollar more than I have to, that’s a good thing.

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