Estimated Tax Payments

Estimated Tax Payments: Everything You Need To Know About

Making estimated tax payments is an important part of being a self-employed individual. If you don’t make these payments, you could end up with a hefty tax bill when it’s time to file your taxes. In this post, we will discuss what estimated tax payments are, who needs to make them, and how to go about making them. We will also answer some of the most commonly asked questions about estimated tax payments. So if you’re self-employed and have been wondering about estimated tax payments, be sure to read this post!

What Are Estimated Tax Payments?

Estimated tax payments are payments of tax that are made on income that is not subject to withholding. This includes income from interest, dividends, capital gains, and self-employment. For most people, estimated tax payments are made four times per year. They are typically made using IRS Form 1040-ES. The purpose is to help ensure that taxpayers pay their taxes throughout the year, rather than owing a large sum of money at tax time.Estimated Tax Payments

Who Needs To Pay Them?

If you are an individual, partnership, S corporation, trust, or estate, you generally have to make estimated tax payments if you expect to owe tax of $1,000 or more when you file your return. Estimated tax is the method used to pay tax on income that is not subject to withholding (for example, earnings from self-employment, interest, dividends, rents, alimony, etc.). If you do not pay enough tax through withholding or estimated tax payments, you may be charged a penalty even if you are due a refund when you file your return.

How To Calculate It?

The amount you’ll need to pay each quarter will depend on your income and tax liability for the year. To calculate it, you’ll first need to estimate your total tax liability for the year.

This includes federal, state, and local taxes. Once you have an estimate of your tax liability, you’ll need to divide it by four. This will give you the amount you need to pay each quarter. For example, if your total tax liability for the year is $4,000, you’ll need to pay $1,000 each quarter in estimated taxes.

What Happens If I Don’t Pay Estimated Tax Payments?

If you don’t pay your estimated tax payments, there are a few things that could happen.Estimated Tax Payments

  • You could be subject to a penalty. The penalty is calculated based on the amount of tax you owe and the length of time that you’ve owned it.
  • The IRS could place a lien on your property. This means that you won’t be able to sell or borrow against your property until the tax is paid.
  • The IRS could levy your bank account. This means that they could take the money directly out of your account to pay the taxes you owe.
  • The IRS could garnish your wages. This means that they could take a portion of your paycheck to pay the taxes you owe.
  • Finally, the IRS could file a notice of federal tax lien. This is a public record that would show up on your credit report and could make it difficult to get loans or lines of credit in the future.


It’s a good idea to check your estimated taxes before submitting the return. You might be surprised by how much you need and don’t want owe. If you’re not sure whether or not you need to be paying estimated taxes, consult with an accountant or the IRS website. Overestimating can save you from paying taxes plus interest. It’s always better to overestimate than underestimate and have more on your plate at once. Thank you for reading!

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