Do you need to make Estimated Tax Payments? If you’re a small business owner, self-employed or you don’t have taxes withdrawn from your income, then chances are you do. Making estimated tax payments helps you avoid a large unexpected tax bill when you file your federal tax return. Taxpayers make the payments four times a year, one payment each quarter. Most taxpayers who earn a paycheck have their employer withhold the necessary taxes from their checks. If you don’t have them withheld, then you will need to make tax payments. Here is what you need to know regarding estimated tax payments.
- If you expect to owe more than $1,000 in taxes for 2020, you must make estimated tax payments.
- Estimated tax requirements are different for farmers and fishermen.
- Corporations generally need to make these payments if they expect to owe more than $500 when they file their 2020 federal tax return.
- If you aren’t sure how much you will owe, make payments similar to the payments you made in the previous year.
- You make one payment each quarter, four times a year
- Along with paying income tax, you can pay other taxes, including self-employment tax, through estimated tax payments.
- If you are an individual, you can use the following form to figure out your payment.
- You can make your payment online using the IRS’s website
- This includes paying directly from your bank account or using a debit or credit card
- If you don’t pay enough taxes through withholdings and estimated tax payments, you may be penalized. You can also be penalized if your estimated tax payments are late.
- For 2020, the penalty applies to anyone who pays less than 90% of the taxes they owe.
The next estimated tax payment deadline is September 15th. If you need help calculating your estimated tax payments or filling out your federal tax return, Polston Tax can help. We have a team of tax accountants that can help you figure out how much you owe and how much you need to pay each quarter in order for you to avoid a penalty. Give us a call at 844-841-9857 or click below to schedule a free consultation.