The self employment tax covers the Social Security and Medicare taxes on your net self employment earnings. The self employed must pay this tax if they have $400 or more in net self employment earnings, and they must pay it themselves because they don't have an employer who withholds it for them. Although it is called the self employment tax, it is not the only tax you must pay to the federal government if you are self employed. You must pay this tax in addition to your federal income tax each quarter.
The easiest way to make your estimated quarterly tax payments is to use the Treasury Department's Electronic Federal Tax Payment System at EFTPS.gov. Using EFTPS allows you to avoid any confusion and costs involved with mailing a paper check. Because, due to privacy concerns, EFTPS will not contact you via email, the initial setup and enrollment takes a little longer than you might think.
Go to EFTPS.gov and follow the simple enrollment steps. You will need your Social Security Number or Individual Taxpayer Identification Number and your bank account number and routing number. Once you've enrolled online, you will have to wait up to seven business days to receive your PIN in the mail. When you receive your PIN, return to EFTPS.gov and complete the few remaining steps.
To log in and make a payment, you will need both your PIN and the Internet password you create when you complete your enrollment, so write them down or email them to yourself so you remember. If you forget your PIN, you will have to call 800-555-8778, and you will have to wait up to seven business days to receive your PIN in the mail. EFTPS will not email you your PIN or share it over the phone. If you forget your Internet password but remember your PIN, you can create a new password on the site.
Although it will take at least a full week to be able to make payments, once you're set up, EFTPS makes it easy to avoid ever missing an estimated income and self employment tax payment and having to pay a penalty again. You can set up payments a full year in advance, and can schedule monthly as well as quarterly payments, if you'd like to treat your taxes as a regular monthly expense. You must make sure to schedule payments by 8 p.m. EST the day before the due date. Signing up with EFTPS does not allow the government to take money from your account without your consent. You initiate each payment.
Remember that, although they are referred to as quarterly payments, your due dates are not three months apart. The first quarter covers January through March, the second April and May, the third June through August, and the fourth September through December. The due dates are the 15th of April, June, September and January, though the date may be pushed back a day or two if the 15th falls on a weekend or holiday. If you set up your next few payments with EFTPS now, you won't even have to think about quarterly payments for a year.