But, if you opened your own law practice this year, you’re not only filing taxes for last year: you’ll also need to start paying taxes for this year. When someone else is paying you as an employee, they’re (hopefully) taking out your taxes, Social Security and Medicare contributions for you; when you’re self-employed, you have to manage that yourself (your tax payments will include Self-Employment Tax, as well: your Social Security and Medicare contributions, in full).
This can come as a surprise to new attorney entrepreneurs; and, the surprise gets even more unpleasant: if you don’t make your estimated tax payments, you will be subject to interest and penalty charges.
Fortunately, there is a good deal of information available from the Internal Revenue Service on the subject, including: this general guide, a pamphlet on self-employment tax and a collection of tips for making estimated tax payments.
Estimated tax payments are due quarterly; for this tax year, the due dates are: April 15, June 16 and September 15, 2014 and January 15, 2015. There are a number of payment options available through the IRS, ranging from classic payment vouchers to an online option, the latter available through the Electronic Federal Tax Payment System (EFTPS).
Since estimated taxes are paid based on your estimate of your adjusted gross income, taxable income, taxes, deductions and credits for the current tax year, you’ll need to engage in some revenue projection, in order to meet your payment obligations. IRS Form 1040ES includes a worksheet for this purpose. We’ve also addressed the subject of revenue projection, and offered some tips of our own, previously in this space.
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So, what’s stuck in my head this week?
‘Do for the Others’ by Stephen Stills
Stephen Stills, and his sweet porkshop sideburns, are something seriously underrated. Now, I, of course, celebrate his entire catalogue. This is a quiet, smoldering song, that’s good for a winter’s night; and, I’m sure we’ve got a few cold evenings left to go.
At least Flavor Flav gives him some love.
This post originally appeared in the Massachusetts Bar Association’s eJournal.