Q2 Estimated Tax Deadline Looms; However, Study Finds Only 38% of Freelancers Pay Quarterly Taxes
CEDAR RAPIDS, Iowa, June 11, 2018 /PRNewswire/ — The deadline to pay estimated taxes for the second quarter is June 15, 2018, but only 38% of freelancers make quarterly payments to the Internal Revenue Service, according to a new Ipsos Marketing study commissioned by TaxAct.
The penalties for not filing returns and paying taxes owed can be up to 5% of an unpaid tax bill each month, which can take its toll on freelancers—most of whom, according to the study, are less stable financially than other taxpayers, and carry unsecured debt.
The report, “Measuring the Financial Health of the Freelance Industry,” found:
- 63% of freelancers feel they are “unstable” or “just getting by” financially.
- Only 43% of freelancers are confident about their overall financial future.
- 64% of freelancers carry debt, and of those debtholders, 56% have unsecured debt.
- A mere 37% of freelancers would be able to handle a major unexpected expense well.
- Only 40% of freelancers are “very comfortable” or “somewhat comfortable” with their current retirement savings plans.
When it comes to tax preparedness, the study found that 59% of freelancers are confident with their tax deductions, but only 38% of freelancers expect to file a separate business tax return.
“The research clearly shows that the majority of freelancers are in greater need of financial guidance than members of the workforce with more traditional income,” said Jenna Ivanoski, Gig Economy Product Manager for TaxAct. “Given the unstable financial situation for most freelancers, quarterly tax penalties can really add up, and even put their very financial security at risk. At TaxAct, we are well-positioned to provide freelancers, and the independent tax professionals who serve them, with solutions that not only help maximize their tax refunds, but also strengthen their financial health all year long.”
TaxAct recently rolled out a series of enhancements available within its TaxAct® Freelancer and TaxAct® Premium solutions, including the new Deduction Maximizer™ and Self-Employment Tax Calculator, to help freelancers optimize their tax refunds and identify ways to save more during the entire year—as opposed to just tax season. To learn more about TaxAct Freelancer, visit https://www.taxact.com/individual-taxes/online/freelancer.
The study from Ipsos Marketing also includes interesting findings about freelancers based on their professions and living arrangements, such as:
- Consultants and Web/software developers are more likely to make quarterly payments to the IRS and feel confident about tax deductions.
- Freelancers who are homeowners tend to earn a higher income, are more likely to be in cohabitating relationships, and have a more positive outlook on their financial futures.
- Consultants and Web/software developers earn a higher income from their primary income sources, while writers and bloggers earn less.
- In addition to earning a higher income, Web/software developers also tend to have more positive financial outlooks, are more likely to add to retirement accounts, and are better equipped to handle unexpected expenses.
TaxAct is the savvy tax-filing partner, providing hardworking Americans with affordable digital and downloadable tax management software to successfully navigate the U.S. Tax Code and improve their overall financial well-being. TaxAct’s products enable all users, regardless of profession or tax bracket, to quickly, accurately, and cost-effectively file their taxes—and find ways to save money in all areas of their financial lives.
TaxAct also offers a suite of TaxAct Professional enterprise solutions to help independent tax professionals maximize revenue and optimize client service. TaxAct Professionals can efficiently manage and grow practices of any size using scalable software and e-filing options which are customized for their businesses. To learn more about TaxAct, a business of Blucora, Inc. (NASDAQ: BCOR), visit www.taxact.com and www.taxact.com/professional, or connect with us on Facebook, LinkedIn, and Twitter.
About the Study
These are the findings from an Ipsos poll conducted January 22-28, 2018 on behalf of TaxAct. For the survey, a sample of 502 adults who self-identify as being a freelancer (n=208), sole proprietor (n=117), or small business owner (n=177) from the continental U.S., Alaska and Hawaii was interviewed online, in English. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll has a credibility interval of ±5.0 percentage points for all respondents surveyed.
JConnelly for TaxAct
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