Famous Pay Federal Estimated Tax References

How to Pay Federal Estimated Taxes Online to the IRS in 2021 Estimated tax payments, Irs, Tax from www.pinterest.com

Pay Federal Estimated Tax: What You Need to Know in 2023

Introduction

As a taxpayer, you have a responsibility to pay taxes on your income. If you are self-employed or have income that is not subject to withholding, you may be required to pay federal estimated tax. In this article, we will discuss what federal estimated tax is, who needs to pay it, and how to make payments.

What is Federal Estimated Tax?

Federal estimated tax is a tax payment made on income that is not subject to withholding. This includes income from self-employment, rental income, and investment income. The purpose of estimated tax is to ensure that taxpayers pay their tax liability throughout the year, rather than waiting until the end of the year to pay in one lump sum.

Who Needs to Pay Federal Estimated Tax?

If you receive income that is not subject to withholding, you may be required to pay federal estimated tax. This includes self-employed individuals, freelancers, and those with rental or investment income. Generally, if you expect to owe $1,000 or more in taxes for the year, you should make estimated tax payments.

How to Calculate Your Estimated Tax

To calculate your estimated tax, you will need to estimate your income and deductions for the year. You can use Form 1040-ES to help you calculate your estimated tax. The form includes a worksheet that will help you estimate your tax liability and determine how much you should pay each quarter.

When to Make Estimated Tax Payments

Estimated tax payments are due on a quarterly basis. The due dates for estimated tax payments are April 15, June 15, September 15, and January 15 of the following year. If the due date falls on a weekend or holiday, the payment is due on the next business day.

How to Make Estimated Tax Payments

There are several ways to make estimated tax payments. The easiest way is to use the Electronic Federal Tax Payment System (EFTPS). This allows you to make payments online or by phone. You can also pay by mail using Form 1040-ES or by using a credit or debit card.

What Happens if You Don't Pay Estimated Tax?

If you don't pay enough estimated tax throughout the year, you may be subject to an underpayment penalty. The penalty is calculated based on the amount of tax you owe and the amount you paid throughout the year. To avoid the penalty, you should make sure to pay at least 90% of your tax liability throughout the year.

Tips for Paying Estimated Tax

Here are some tips to help you pay your estimated tax: - Keep track of your income and expenses throughout the year. - Use Form 1040-ES to help you estimate your tax liability. - Set aside money each quarter to pay your estimated tax. - Use the Electronic Federal Tax Payment System (EFTPS) to make payments. - Make sure to pay at least 90% of your tax liability throughout the year to avoid an underpayment penalty.

Conclusion

Paying federal estimated tax is an important responsibility for taxpayers who have income that is not subject to withholding. By making estimated tax payments throughout the year, you can avoid a large tax bill at the end of the year and avoid underpayment penalties. Use the tips in this article to help you pay your estimated tax and stay on top of your tax liability.

Share :