Did you know income tax is a “pay-as-you-go” tax?
That means, your taxes aren’t just “due” April 15th, they are technically due as you earn income. Most taxpayers pay their taxes as they earn their income through tax withholding on their paychecks.
So, who pays estimated tax payments?
Self-employed individuals, landlords, and retired individuals often need to pay estimated payments. This is because income, such as self-employed business income (including income from partnerships, S corps, and sole-proprietorships), interest and dividends, and rents aren’t subject to withholding like wages.
I have withholding on my W-2, but should I still pay an estimated tax payment?
If your W-2 withholding doesn't cover at least 90% of your tax due in the current year, or 100% of the tax due from the previous year, you will also want to make an estimated payment to avoid late payment fees and interest.
When are estimated tax payments due:
How can I make an estimated payment?
You can pay via check using the payment voucher Form 1040-ES. Or you can pay online via the Electronic Federal Tax Payment System (EFTPS) at www.eftps.gov/eftps. You may also need to make state estimate payments depending on your specific situation.
Should I make an estimated tax payment?
Let Millington & Co CPA’s help calculate if you need to submit estimated tax payments. We can project your potential tax liability and estimate what your payments should be for both the federal and state.
Cayley Allen, CPA