Who Needs to Pay Estimated Taxes
You may have to make estimated tax payments if you earn income that is not subject to withholding. Examples include incomes from the following: 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 is not enough or if you had a tax liability for the prior year. Please consult a professional with tax expertise regarding your individual situation.¹
How to Pay Estimated Taxes
If you file 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.²
How to Figure Estimated Taxes
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.
When to Pay Estimated Taxes
For estimated tax purposes, the year divides between 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 a Hantzmon Wiebel team member.
¹The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties.
The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2021 FMG Suite.
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Our firm provides the information in this e-newsletter for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal or other competent advisors. Before making any decision or taking any action, you should consult a professional advisor who has been provided with all pertinent facts relevant to your particular situation. Tax articles in this e-newsletter are not intended to be used, and cannot be used by any taxpayer, for the purpose of avoiding accuracy-related penalties that may be imposed on the taxpayer. The information is provided “as is,” with no assurance or guarantee of completeness, accuracy or timeliness of the information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability and fitness for a particular purpose.