You May Need to Make Estimated Tax Payments

You may have to make estimated tax payments if you earn income that's not subject to withholding, such as income from self-employment, interest, dividends, alimony, rent, realized investment gains, prizes, and awards.

You also may have to pay estimated taxes if your income tax withholding on salary, pension, or other income isn't enough or if you had a tax liability for the prior year. Please consult a professional with tax expertise regarding your individual situation.

How to Pay Estimated Taxes

If you are filing as a sole proprietor, partner, S corporation shareholder, and/or a self-employed individual and expect to owe tax of $1,000 or more when you file a return, you should use Form 1040-ES, Estimated Tax for Individuals, to calculate and pay your estimated tax. You may pay estimated taxes either online, by phone, or through the mail.

How to Figure Estimated Tax

To calculate your estimated tax, you must include your expected adjusted gross income, taxable income, taxes, deductions, and credits for the year. Consider using your prior year's federal tax return as a guide.

How to Pay Estimated Taxes

For estimated tax purposes, the year is usually divided into four payment periods, each with a specific payment due date. The usual due dates are April 15, June 15, September 15, and January 15 of the following year. If the due date for making an estimated tax payment falls on a Saturday, Sunday, or legal holiday, the payment will be due on the next business day.

For more information about estimated tax payments, contact your tax advisor.

© 2024