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Home Tax Debt

Estimated Tax :Who ,When & How to Pay ?

by Prashant Thakur
February 17, 2020
in Tax Debt
0

Internal Revenue Code provides that you need to estimate the federal tax liabilities continuously during the current year and make quarterly estimated tax payments to treasury. Basically , the tax rule imposes a penalty for not paying at least 90% of the total tax obligation for the current year.

Table of Contents

  • Who needs to pay quarterly estimated tax?
  • Estimated Tax Penalty
  • How to Check your estimated tax obligation?
  • Quarterly Estimated Tax Due Dates
  • How to pay estimated tax?

Who needs to pay quarterly estimated tax?

If you owe $1,000 or more of taxes as per tax return, you will have to pay the estimated tax every quarter. Apart from that ,estimated tax has to be paid by the following types of taxpayers who

  • is self-employed.
  • is an independent contractor.
  • has more than one job but doesn’t have each employer withhold taxes.
  • is a representative of a direct-sales or in-home-sales company.
  • participates in sharing economy activities where they are not working as employees.

Estimated Tax Penalty

W have written a separate article on Penalty for Underpayment of Estimated Tax . You may be facing an estimated tax penalty if your tax payment (including tax withheld ) is less than

  • 90 percent of the tax shown on the return for the current tax year or
  • 100 percent of the tax shown on the return for the preceding tax year

There are special rules for farmers and fishermen about the imposition of the penalty for estimated tax shortfall. Please refer to IRS Publication 505,for more on penalties for underpayment of tax.

How to Check your estimated tax obligation?

Just use IRS Form 1040-ES, Estimated Tax for Individuals, to figure out estimated tax payments accurately. Generally, IRS also mail Form 1040-ES vouchers with instructions in late March to taxpayers who used this form last year. Secondly, those taxpayers who are subject to withholding tax (like employees, contractors etc) can use the Withholding Calculator on IRS.gov. to see if the tax payment obligation is met before filing of tax return.

Further, an employee who expect to receive long term capital gains or qualified dividends, or employees who owe self-employment tax, alternative minimum tax, or tax on unearned income of minors should use the instructions and worksheets in Publication 505 to check whether they should change their withholding or pay estimated tax.

Quarterly Estimated Tax Due Dates

The four quarterly payments for tax year 2019 need to be made by the date mentioned below:

  • April 15, 2019: the due date for your first quarterly estimated tax (QET) payment of estimated taxes on the income made in January, February, and March 2019.  
  • June 17, 2019: Pay quarterly estimated taxes on the income you made in April and May 2019.
  • September 16, 2019: Pay quarterly estimated taxes on the income you made in June, July, and August 2019 are due on this date.
  • January 15, 2020: Quarterly estimated taxes for the months of September, October, November, and December 2019 are due on this date.

There are many IRS tax tools. You can use IRS tax calendar and also add important dates to your online Calendar by subscribing to the IRS Tax Calendar for Businesses and Self-Employed.

How to pay estimated tax?

The fastest and easiest way to make estimated tax payment online .Just use IRS Direct Pay or the Treasury Department’s Electronic Federal Tax Payment System (EFTPS). For filers paying by check, the check must be made payable to the “United States Treasury.”

Post Disclaimer

While the information on this site  - Internal Revenue Code Simplified-is about legal issues, it is not legal advice or legal representation. Because of the rapidly changing nature of the law and our reliance upon outside sources, we make no warranty or guarantee of the accuracy or reliability of information contained herein.

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  • Tax Rates 2023
    • Pension Plans Limits 2023
    • Estate & Trust
    • 2022 Tax Brackets
      • USA State and Local Taxes
      • EIC Table 2023, 2022
    • Tax Bracket 2021
    • Tax Brackets 2020
    • Tax Bracket 2019
      • Long Term Capital Gains Rate- 2019,2018,2017
      • 2019 & 2018 Standard Deduction
      • Kiddie Tax Brackets
    • Depreciation MACRS Table
  • Tax Information
    • Latest Phone number of IRS
    • Local Taxpayer Advocate Service Office
    • Search CAA & AA
  • Tax Calculator 2022 & 2023
    • Fastest Sales Tax Reverse Calculator
    •  EITC Calculator 2022 & 2023
    • SEP-IRA Calculator
    • Penalty Calculator
    • IRA Contribution Limit Calculator
    • Mileage Reimbursement Calculator
    • Net Investment Calculator
    • Alternative Minimum Tax Calculator for 2017 & 2018
    • Estimated Tax Penalty
    • Section 179 Deduction
    • tax residency
      • Physical Presence Test Calculator
      • US Tax Residency Calculator
      • First Year Choice Calculator
    • Capital Gains Calculator
    • Home Office Deduction Calculator
  • Write to me
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    • California Tax Calculator With Tax Rate
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    • Illinois tax calculator with tax rates
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