For many Amazon sellers taxes are the furthest thing on their mind. For others sales tax is what grabs the most attention. However, ignoring income taxes can be disastrous. Whether you sell on Amazon through Fulfilled by Merchant (FBM) or Fulfilled by Amazon (FBA) you should be aware of your income tax obligations, especially if you are a full-time seller.
When you are an employee taxes are pretty simple. Your employer withholds them and pays the IRS, or State, before the money gets to you. At the end of the year when it comes time to file a tax return the amount you owe is compared to the amount that was withheld. Easy breezy!
Why Make Estimated Tax Payments
However, things are different when you’re not an employee. If you’re not on someone’s payroll the government requires that you estimate your taxes and pay them on a quarterly basis if you expect to owe at least $1,000 in tax AND expect your withholding and refundable credits to be less than:
- 90% of the tax shown on your current year’s return
OR
- 100% of the tax shown on your prior year’s return (110% if your adjusted gross income is more than $150,000)
Bookkeeping and income taxes are like peanut butter and jelly. They go hand in hand. Think about it for a second. Without proper books how can you tell how much the business is making or if it’s making any money at all? Without knowing how much profit you have then it’s very difficult to get an accurate grasp of what’s owed for income taxes or plan for what’s to come.
How Do You Make Payment
There are several ways to make estimated tax payments. The IRS has made it easier to pay and now accepts check, money order, bank draft, debit card, credit card, wire transfer and even cash (at participating retailers).
There is also the IRS2Go app that allows you to not only make tax payments by phone but also check the status of your refund.
When Are Estimated Tax Payments Due
Estimated payment due dates are:
- April 15
- June 15
- September 15
- January 15