Estimated Tax Payments

Why are Estimated Tax Payments required?

Compliance is a key component in resolving and preventing tax liabilities. If you have balances in collections with the IRS or your state, you must ensure that your future tax returns are filed timely and that the funds necessary to cover your tax obligation have been deposited with the Internal Revenue Service and your state at the time the tax return is filed.   Making estimated tax payments at least every quarter, prevents you from incurring tax liabilities in the future and helps you resolve your back taxes.

How Do I Know If I Am I required to make Estimated Tax Payments?

If you have self-employment income, you need to ensure you are sending estimated tax payments to the Internal Revenue Service and your state to cover the tax due on the net income you earn and your self-employment taxes.

How Much Do I Need to Pay?

If your income is similar to the income on your last year’s tax return and not much has changed in your household, you can estimate your current year tax obligations by dividing your tax liability from last year by four. For example, if you owed $12,000 in tax last year, and your income is the same, you should make quarterly estimated tax payments of approximately $3,000 per quarter.

If your income fluctuates, or your household has changed, you can use the Estimated Tax Payment Worksheet, Form 1040-ES, to determine your current tax obligations. Completing this worksheet will assist you in determining what your estimated tax payments should be on a quarterly basis in order to prevent the accrual of any new tax liabilities going forward. It also includes estimated tax payment vouchers for mailing Estimated Tax Payment checks to the Internal Revenue Service.

When are Estimated Tax Payments due?

Estimated tax payments are due on the 15th of the month following the end of each quarter.

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How do I make Estimated Tax Payments to the Internal Revenue Service?

The Internal Revenue Service will accept checks and money orders as well as electronic payments. You can review all available payment methods here:

Payment Methods for the Internal Revenue Service

Remember: it is important to designate your payments to the desired Tax Form and Tax Year to ensure they are applied correctly.