Quarterly Income Tax for Your Etsy Business - dummies

Quarterly Income Tax for Your Etsy Business

By Kate Gatski, Kate Shoup

If you run your Etsy business as a sole proprietorship and you live in the United States, you have the distinct pleasure of paying income taxes not once, not twice, not three times, but four times per year — on April 15, June 15, September 15, and January 15 (unless any of those days falls on a weekend or holiday, in which case you pay up on the next business day).

Paying these quarterly taxes is a breeze. You can download the necessary form (called a 1040-ES) from the IRS’s website. You need to download a similar form from your state government’s site. Then fill out the forms, cut your checks, and send them to the appropriate office. (Check the form for details.)

Alternatively, you can pay your taxes online using the Electronic Federal Tax Payment System (EFTPS). (Note: EFTPS is for federal taxes only; check with your state to see what resources are available for paying your state taxes online.)

Figuring out how much you owe is a little more involved. One approach is to simply look at your prior-year tax return, figure out how much you paid in taxes, divide that number by four, and send that amount for each quarterly installment — but that strategy won’t do if you expect your income to be vastly different. Our advice? Don’t listen to us. Seek the guidance of a qualified accountant.