Do YOU have to pay estimated federal income tax? Avoid penalties by making timely estimated tax payments.Who has to pay estimated federal income tax and why?
Different than you might think, the IRS does NOT like when you have to pay a lot of taxes on April 15. Don't get me wrong they DO want you to PAY a lot of taxes, it's just that they don't want you to pay it on April 15 but throughout the previous year.
So you might think that the ideal thing is to invest the money and make interest on it through out the year and just pay your whole taxes on April 15.
But no, the IRS does NOT want you to do that and they will charge you the Underpayment of Estimated Tax Penalty if you do not pay enough tax during the year.
If you get paid wages you will most likely not have to worry about estimated tax payments because your employer will deduct withholding taxes on every paycheck.
But if you have self-employment income or unemployment income, sold property or stocks, have rental or dividend income, received Schedule K1 from a partnership or corporation, or any other income that withholding tax is not withheld, you might need to pay estimated taxes four times a year.
How do you know how much estimated taxes you have to pay or if you have to pay at all?
Use Form 1040-ES to figure out the correct amount of tax to pay.
When is the estimated tax due?
It is due four times a year. The first payment is due the same time like the tax return of the previous year on April 15. The other due dates are June 15, September 15, and January 15 of the next year.
These dates like all other dates with the IRS can change if they fall on a Saturday or Sunday or legal holiday. In that case the estimated federal income tax payment is due the next business day.
If you file your tax return and pay the tax that you still owe before January 31 you do not have to send in you mid-January payment.
Updated December 30, 2012
Can't find what you're looking for? You can search this site here.
How will Trumps Tax Reform Affect YOU?
Check out this new calculator, to see how much you will gain or lose.
Get your exact child tax credit amount with Trump's new Family tax credit.
[?]Subscribe To This Site
Wise Tax Tips