The Internal Revenue Service mandates federal taxes from all citizens who earn incomes in the United States. Many citizens pay their taxes each pay period by withholding portions of their checks. However, if you are a contractor or are self-employed, you may not get a regular paycheck with withholdings. You may in fact receive a 1099, not a W-2, at the end of the year. If you do receive this document, you must pay taxes throughout the year. These are called estimated taxes.
Obtain a blank IRS Form 1040ES. This is the Estimated Tax Worksheet. Remember that you must make estimated tax payments throughout the year, so your estimates may be off, depending on the amount of money you truly earn. You must make estimated payments four times per year: April 15th, June 15th, September 15th and December 15th.
Collect all documents relating to deductions, business expenses and expenses for the business use of your home (if applicable). You will need these complete the IRS Form 1040ES. Remember that there is a flat tax of 15.3 percent on all self-employment income as of 2013.
Complete the 1040ES. Remember that the federal tax rates for 2012 are as follows: 10 percent, 15 percent, 25 percent, 28 percent, 30 percent, 33 percent and 35 percent. This is in addition to the self-employment tax of 15.3 percent. You must pay double in Social Security and Medicare/Medicaid because an employer (who would normally contribute 50 percent) is not paying for you.
Divide the number you calculated on Line 15 by four. These will be your four estimated tax payments. Remember that this is an estimate and you could end up owing more when you file your taxes in April of the following year. Keep a cash reserve for these instances.
Pay your estimated taxes. You can pay online with the IRS for a fee or you can mail in your estimated tax payments with the 1040ES Payment Voucher. See Resources for the correct address for mailing. The addresses differ depending on the state in which you reside.