Review Of Estimated Tax Payments 2021 References

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Estimated Tax Payments 2021: What You Need to Know

Introduction:

As a taxpayer, you are required to pay taxes on your income throughout the year. For those who do not have taxes withheld from their paychecks, estimated tax payments are necessary to avoid penalties and interest. In this article, we will discuss everything you need to know about estimated tax payments for the year 2021.

What are Estimated Tax Payments?

Estimated tax payments are payments made to the IRS to cover taxes on income that is not subject to withholding. This includes income from self-employment, rental income, and investment income, among others. The estimated tax payments are made quarterly, and taxpayers are required to pay at least 90% of their total tax liability for the year.

When are Estimated Tax Payments Due?

The due dates for estimated tax payments are as follows: - April 15, 2021 - June 15, 2021 - September 15, 2021 - January 18, 2022 (Extended deadline due to Martin Luther King Jr. Day) It is important to note that the due dates may vary depending on weekends and holidays. If the due date falls on a weekend or holiday, the payment is due on the next business day.

Who Needs to Make Estimated Tax Payments?

If you receive income that is not subject to withholding, you may need to make estimated tax payments. This includes self-employed individuals, freelancers, independent contractors, and small business owners. You may also need to make estimated tax payments if you receive income from investments, rental properties, or if you have a significant amount of income from other sources.

How to Calculate Estimated Tax Payments?

To calculate your estimated tax payments, you will need to estimate your total income for the year, as well as your deductions and credits. You can use Form 1040-ES to help you calculate your estimated tax payments.

What Happens if You Don't Make Estimated Tax Payments?

If you do not make estimated tax payments, you may be subject to penalties and interest. The penalty for underpayment of estimated tax is calculated based on the amount of tax you owe and the number of days you are late in making the payment.

How to Make Estimated Tax Payments?

You can make estimated tax payments online using the IRS Electronic Federal Tax Payment System (EFTPS). You can also make payments by mail using Form 1040-ES or by phone using the IRS Direct Pay system.

What if Your Estimated Tax Payments Change?

If your estimated tax payments change during the year, you can adjust your payments accordingly. You can do this by filing a new Form 1040-ES or by adjusting your payments online using the EFTPS system.

What if You Overpay Your Estimated Tax Payments?

If you overpay your estimated tax payments, you will receive a refund when you file your tax return. You can either apply the refund to your next year's estimated tax payments or receive the refund as a direct deposit or check.

Conclusion:

In conclusion, estimated tax payments are an important part of the tax system for those who receive income that is not subject to withholding. By understanding the rules and regulations surrounding estimated tax payments, you can avoid penalties and interest and ensure that you are meeting your tax obligations. Remember to make your estimated tax payments on time and to adjust them if your income or deductions change throughout the year.

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