From the course: Taxes and Accounting for Music
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Estimated taxes
- The IRS doesn't want to wait until April 15th to get paid. For that reason, Uncle Sam requires that self-employed business people pay their taxes in four installments spread out over each tax year. If you fail to make these timely payments and you underpay, you'll be hit by a penalty at tax time. If you have to pay federal estimated taxes, you may also have to pay state estimated taxes, unless you live in a state where income is not taxed. Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming, New Hampshire, and Tennessee. You must pay estimated taxes if you are a sole proprietor, partner in a partnership, or a member of an LLC, and you expect to owe at least $1,000 in federal tax for the year. If you've formed a C corporation and expect to pay $500 in taxes, the corporation will have to pay estimated taxes. However, if you paid no taxes in the last year, you don't have to pay any estimated tax for the current year. How much do you pay? If you did not pay estimated taxes…
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