It is true that a salesman who operates as an independent contractor should file estimated quarterly income taxes. Independent contractors, unlike employees, do not have taxes withheld from their paychecks. Therefore, they are responsible for estimating their tax liabilities throughout the year and making quarterly tax payments to the IRS to avoid penalties and interest.
The IRS requires independent contractors to pay taxes on income that is expected to be above a certain threshold in a year, commonly set at $1,000. This requirement ensures that income is taxed as it is earned rather than only at the end of the tax year. Consequently, making these estimated payments helps manage cash flow and keep taxes from piling up at tax time.
In this case, understanding the responsibilities of independent contractors reflects the broader context of tax laws and financial management within real estate sales, where salespersons must navigate their financial obligations independently.