Do bloggers, podcasters, YouTubers, and other content creators have to pay quarterly taxes? What exactly are quarterly taxes (and does that mean we have extra taxes to pay)?
What kind of trouble can you get into if you don't make quarterly payments? All of this tax stuff can be overwhelming. Do we really have to deal with all of that?
After several years of business and non-profit management, I went the self-employment route. I discovered that my business experience prepared me for taxes in the gig economy and with my content business. I wanted to share that background and experience and help you get a feel for the business of running your own content business.
This is part of a series on taxes for bloggers and content creators. In this article, we'll look at quarterly taxes (or estimated quarterly payments) and how they can help you when tax time comes around.
It's great when you start to make some money from your creative work. You may have built enough of an audience that you have advertising or sponsorship revenue. Perhaps you've made money from affiliate sales or are selling products. It's great to find some success, but then taxes come around and take all the fun out of it.
But taxes don't have to be such a big mystery. We'll dig in a bit and make some sense of this quarterly taxes for bloggers and content creators thing.
About this article
This article aims to provide information and education about how taxes work and what quarterly tax payments are all about.
This article is not here to provide tax advice, and you should not take it as such. You should find a tax professional who understands self-employment that can provide specific advice and guidance for your individual tax situation.
We focus on content creators and self-employed individuals in the United States. Some state and local taxes may have their own rules, and tax laws in other countries differ. Find a tax expert to help you with your local tax regulations.
Ultimately, we're talking about small business taxes. Most of us in the content creation realm are sole proprietors, meaning we operate a business as individuals. One thing about being self-employed is we're on our own for taxes. That's why this quarterly tax thing is so important. We'll talk about that including:
- Do we really have additional quarterly taxes?
- Are quarterly payments required?
- How do we know how much to send in?
- What are the quarterly tax payment dates?
- How do bloggers and content creators file quarterly taxes?
- Additional questions about quarterly taxes for bloggers, YouTubers and other content creators
Do Bloggers really have to pay additional quarterly taxes?
No. Quarterly taxes are not a thing. You do not file taxes quarterly or have additional taxes charged quarterly. Neither are you required to report your income on a quarterly basis. You still do that once a year.
While many call them ‘quarterly taxes,' they're actually just quarterly estimated tax payments. I would go so far as to say you're not actually filing anything. You are simply sending in a payment each quarter.
The best way to put it is that quarterly estimated tax payments are our way to withhold and submit our tax payments throughout the year. When we are self-employed, there's no employer to take our taxes out for us.
Regardless of whether you're an employee or self-employed, income taxes are pay-as-you-go. That means we must have paid our tax bill by the end of the year.
Quarterly estimated taxes are our way of making those payments. We need to estimate what we'll need to pay in and send that to the IRS once a quarter.
Are quarterly payments required?
There is no specific requirement that every business needs to make quarterly payments. Ultimately, it's a judgment call you need to make based on your tax situation.
It makes sense to make quarterly payments if you think you may need to pay in when you file your tax return.
The requirement here is more about ensuring your tax liability is met by year's end than about making quarterly payments. The U.S. tax system operates on a pay-as-you-go basis.
This means taxpayers must pay most of their tax during the year, as the income is earned or received. Taxpayers must generally pay at least 90 percent (however, see 2018 Penalty Relief, below) of their taxes throughout the year through withholding, estimated or additional tax payments or a combination of the two. If they don't, they may owe an estimated tax penalty when they file.IRS Basics of estimated taxes for individuals
THAT is the requirement here. “Taxpayers need to pay most of their taxes during the year, as the income is earned or received.”
If you have yet to pay in enough by April 15 (or whatever tax day is for the year), you may owe additional penalties and interest. If you will owe $1,000 or more on tax day, those penalty and interest charges will likely kick in.
This is more about ensuring you're not scrambling to pay your tax on tax day and avoiding those additional charges. Quarterly payments are about staying on top of things.
If you're not going to owe money when you file, filing quarterly payments become less necessary. It becomes a judgment call on your part.
Does that mean that quarterly payments are optional?
I won't go that far. It's not as much about required versus optional. It's really more about whether it's the best practice for you.
This is different from where there are significant problems if you fail to file your annual tax return. The Internal Revenue Service won't hunt you down because you didn't send in a quarterly payment.
However, if you end up owing penalties and interests because you haven't paid enough, that says a quarterly payment isn't exactly optional.
Here's what it boils down to: If you won't need to pay in on April 15, you won't need to make quarterly payments. That could mean:
- You didn't make enough money to owe taxes
- You had enough tax credits to cover your taxes for your business profits
- There was enough withheld from other income sources (such as your or your spouse's W2 income) to cover your taxes.
Quarterly payments aren't required if your tax liability is covered without them. Otherwise, those payments will avoid penalties and interest.
How do we know how much to send in?
You send in what you send in.
That may seem glib. The thing is, it's easy to get too intimidated by having it exactly right. My observation is that the IRS isn't as concerned about precise amounts. They're called estimated payments for a reason.
There are no hard and fast rules about how much to send in. It's as simple as paying enough to ensure you won't owe money on April 15. How you determine that amount is completely up to you.
I'm sure that some will tell me I'm wrong about this approach. I could be. Maybe if you get well into the six-figure taxable income range, you may need to be more precise.
But I don't want to make this more complicated than it needs to be. Your main priority is sending enough in throughout the year to ensure you don't owe money when you file your taxes.
An optional second priority is to avoid paying too much in. I'm not a fan of giving Uncle Sam an interest-free loan. At the same time, if you send in more than you need, you'll get it back as part of your tax refund.
Here are some steps you can take to help you determine what to send in:
1. Understand what self-employment income is taxable.
There's good news here. Not all the money you get from advertising, affiliate commissions, sponsorships, product sales, and other monetization is taxable. The money your blog or content brings in is your business's income, not your personal taxable income.
As a business, you pay taxes on your profit. It's based on what's left over after expenses. Subtract from your business income hosting fees, plugins, services, and computer and media equipment for your business. Deduct all of the things that are necessary and ordinary for operating your business to determine your profit.
That is your taxable income.
2. Understand these basics about taxes.
There are actually two taxes at play here.
Income tax and self-employment tax.
Income tax could be nothing. It could be a third or more of your profits. The tax rate starts at 10%, but only after subtracting tax deductions. The rate increases as your earnings increase.
A smaller portion of your business profits is usually subject to income tax if that's your only source of income. That's because of how personal tax deductions work.
Self-employment tax is our version of FICA / Social Security / Medicare taxes. It is 15.3% of every dollar of profit your business profits.
Self-employment tax sneaks up on us a bit more if you're not accustomed to it. That's because we don't have to deal with it as employees. It just gets taken out of our paycheck. However, because it's not reduced by tax deductions, the self-employment part of our tax bill is often much greater than the income tax portion.
3. Determine how you will calculate your payment.
The Internal Revenue Service's recommended best practices include making estimated tax payments in equal amounts each quarter.
Generally, taxpayers should make estimated tax payments in four equal amounts to avoid a penalty. However, if you receive income unevenly during the year, you may be able to vary the amounts of the payments to avoid or lower the penalty by using the annualized installment method.IRS Topic 306 Penalty for Underpayment of Estimated Tax.
If you expect your income to be fairly steady from one quarter to another, it's best to calculate your total tax payment for the year and then divide by four.
For many who are just starting to ramp up their businesses, it's hard to determine what the money will be like from quarter to quarter. Once the income opportunities do finally come along, they have a way of blowing up through the year. When that happens, it may be better to calculate on a quarter-by-quarter basis.
There are several ways you can decide what to put aside.
A. Set aside a flat percentage.
This is the simplest method. Estimate your quarterly profit by subtracting expenses from income. Decide on a percentage of that profit to set aside.
What percentage should you choose? There's no one answer for that. Much of it depends on your income tax bracket and what portion of your income is covered by either standard or itemized deductions.
Many people go with 25%. That's because the starting income tax bracket is 10% and self-employment taxes are just over 15%. People often start with that and adjust up or down based on their income levels.
B. Use a tool from a third-party app.
Some bookkeeping apps have good tools for estimating quarterly taxes. Quickbooks Self Employed is a popular accounting software for sole proprietors, and Hurdlr has a great free app for self-employed bookkeeping (these are affiliate links, meaning I may receive a commission for purchases made).
With bookkeeping programs like Hurdlr, you can enter your expenses and income and set up a tax profile. That profile might include filing status and information about additional income. These programs use all that information to estimate what you should set aside for taxes.
C. Base it on your previous payment
If you've filed taxes for self-employment income previously and had to pay in, you can use the payments you made the previous year as a basis. Add your year-end payment to the estimated payments you made, and divide that by four.
D. You can always try the IRS worksheet.
You can go to The IRS form 1040-ES pdf and find the estimated tax worksheet.
Good luck with that.
I feel like I'm good at working through things like this, but I still find their tool to be confusing.
In the end, the tool asks you to estimate what your annual tax return will be. It has you estimate your yearly income and deductions and such.
Here's what I've done.
Personally, I've used the first option. I quickly estimate my profits and save 20% of that. That comes after several years of self-employment and finding that's right about the sweet spot for me.
In my first year, I went with a higher percentage. I set aside 25% of my profits for the first three quarterly payments. Then in early January, I did an early estimate of my taxes.
Then, I compared that estimate to the payments I sent in and the expected tax credits. Those payments included withholding from my wife's paycheck and the quarterly payments I'd sent in.
At that point, I had a good idea of what I still had to pay in. I just sent in that amount for the fourth quarter (January 15).
Whichever method you choose, your main objective is to send in enough to avoid a tax bill when you file. That avoids the extra fees. You don't have to get it exactly. Simply make sure you've sent in enough that you don't owe a lot of money when you file taxes.
4. Set the money aside regularly.
Put that money aside into a savings account as soon as it comes in. A lot of content revenue comes in every month.
I use my 20% method monthly. At the end of the month, I calculate profits for the month and save 20 percent of that.
I go one step further. I move that to a bank account that's not connected to my personal checking. That takes away the temptation to spend it.
- Send it in each quarter at the quarterly due date.
That's what we'll talk about next.
When are the quarterly tax payment dates?
Every quarter, right?
Yeah, well, the IRS doesn't seem to believe in logic.
April 15 makes sense. That's a couple weeks after the first quarter ends.
So then July and October would make sense as well, right?
The quarterly due dates are:
- 1st Quarter = April 15
- 2nd Quarter = June 15
- 3rd Quarter = September 15
- 4th Quarter = January 15.
Not quite the dates you would expect.
Basically, the reason it's wonky is that the US fiscal year ends September 30. An October 15 quarterly date wouldn't get the money in until the next fiscal year, so they moved the due date to September 15. That way, they could dip into the third quarter money for year-end needs.
I never could find out why they decided to move the second quarter deadline up to June.
How do bloggers, YouTubers, and content creators file quarterly taxes?
If you go to IRS form 1040-ES, you get the worksheet that makes it look pretty intimidating. I thought I had to send in the worksheet the first time I sent in a quarterly payment.
However, it's pretty simple when you see the form you have to send in. The IRS is asking for two things:
- Who are you?
- How much are you sending us?
That's pretty much it.
Most of it involves entering your personal information. Name, address, social security (or business information if you've created an LLC or have an EIN for your content business).
And then, you enter the amount you're sending in the box on the top right and mail it in with your check.
Okay, no one sends a check anymore, do they? You might be surprised. However, there are some other options for making a payment:
- IRS direct pay
- The IRS2Go mobile app
- The US Treasury's EFTPS system (for business accounts)
- Cash payments at certain retailers ($1.50 fee)
With each option, you'll receive instructions on how to file and whether the 1040-es can be submitted electronically or needs to be mailed in separately.
Frequently asked questions about quarterly tax payments.
No. You only file your annual income and self-employment taxes. You send in quarterly estimated tax payments. These are not additional taxes or filings.
You won't get “in trouble” or have the IRS out to get you for not sending in quarterly payments. Your primary risk if you don't send in payments is not having paid your tax liability by the time you file. If you owe a significant amount (typically $1,000 or more), you may have additional penalties and interest to pay.
This is different from your tax return. Remember that it's an estimated payment. The IRS isn't particular about how precise your payment is. Their main concern is whether you've paid in enough by year's end to cover your tax bill.
The IRS states that they prefer consistent payments each quarter. However, they make allowances if your income differs dramatically from one quarter to the next. Ultimately they prefer your payments be proportionate to your income. They do not want estimated tax payments backloaded to the end of the year.
The regular quarterly payment dates are April 15, June 15, September 15, and January 15. If those dates are holidays or weekends, then it's the first business day following. In rare circumstances, such as during the pandemic, the IRS pushed many deadlines back by several months to give people time to pay if they had financial setbacks.