Estimated Income Tax Payments

Estimated Income Tax Payments Due - include a payment voucher if paying by paper check and US Mail. If you have not already done so, now is the time to review your tax situation and make an estimated quarterly tax payment using IRS Form 1040-ES.

Alternatively you can pay your estimated tax payments electronically anytime before the end of the tax year. Most people make estimated tax payments in equal amounts by the four established due dates.

Form 1040-ES includes instructions to help you figure and pay your estimated taxes. You can also visit IRS.gov/payments to explore options to pay online, by phone or with a mobile device and the IRS2go app.

The IRS provides two free electronic payment options where you can schedule your estimated and other federal tax payments:

  • Direct Pay allows you to schedule up to 30 days in advance. Direct Pay allows you to pay from your bank account for free. There’s no need to register ahead of time, payments are made online in five easy steps.
  • Electronic Federal Tax Payment System (EFTPS) lets you schedule up to 365 days in advance. EFTPS allows individual and businesses to pay federal taxes electronically online or by phone using the EFTPS Voice Response System.

You must be enrolled to use EFTPS and you’ll receive your personal identification number (PIN) via U.S. mail in five to seven business days.

You’ll only receive an email from Direct Pay or EFTPS if you've requested the service which is good to know in this in day and age of online fraud. Once you opt in for email notifications, you could receive email messages that show:

  • payment scheduled
  • payment cancellation
  • return of a payment
  • reminder for a scheduled payment
  • payment modified
  • address change confirmation

Remember, you are required to withhold at least 90 percent of your current tax obligation or 100 percent of last year’s obligation. If your income is over $150,000 ($75,000 if married filing separate), you must pay 110 percent of last year’s tax obligation to be safe from an underpayment penalty.

A quick look at last year’s tax return and a projection of this year’s obligation can help determine if a payment is necessary. Here are some other things to consider:

  • Avoid an underpayment penalty. If you do not have proper tax withholdings during the year, you could be subject to an underpayment penalty. The penalty can occur if you do not have proper withholdings throughout the year.
  • W-2 withholdings have special treatment. A W-2 withholding payment can be made at any time during the year and be treated as if it was made throughout the year. If you do not have enough to pay the estimated quarterly payment now, you may be able to adjust your W-2 withholdings to make up the difference.
  • Self-employed need to account for FICA taxes. Remember to account for your Social Security and Medicare taxes as well. Creating and funding a savings account for this purpose can help avoid the cash flow hit each quarter when you pay your estimated taxes.
  • Don't forget state obligations. With the exception of a few states, you are often also required to make estimated state tax payments if you're required to do so for your federal taxes. Consider conducting a review of your state obligations to ensure you meet these quarterly estimated tax payments as well.

Contact me today! I am happy to offer a complimentary consultation and arrive at your next quarterly estimated income tax payments.

Remember - Estimated Income Tax Payments Due!

John R. Dundon, EA [720-234-1177, John@JohnRDundon.com]. John is a lifelong student of the US Tax Code; enrolled with the United States Treasury Department to practice before the IRS (Enrolled Agent # 00085353); under contract with the IRS as a Certified Individual Taxpayer Identification Number (ITIN) Acceptance Agent; regulated under USC 31 Section 330 & USC 26 Section 7525a.3.A; governed under US Treasury Cir. 230.

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