You May Have to Pay Estimated Taxes if ..... - John R. Dundon II, Enrolled Agent
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You May Have to Pay Estimated Taxes if …..

26 May You May Have to Pay Estimated Taxes if …..

Posted at 00:00h in Estimated Taxes by
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According to IRS Publication 505 you may have to pay estimated taxes if you are self-employed and have income other than your salary or you receive income that is not subject to withholding, such as:

  • Self-employed income

  • Rent

  • Interest

  • Dividends

  • Alimony

  • Gains from sales of assets

  • Prizes and awards

You also may have to pay estimated tax if not enough income tax is being withheld from your salary, pension or other income.

Farmers and commercial fishermen have special criteria to meet and may pay less in estimated taxes. You are considered a qualified farmer or fisherman if you earn more than two thirds of your gross income from farming or commercial fishing. Refer to IRS Publication 505, Tax Withholding and Estimated Tax for more information.

Estimated tax is not required for 2011 if all three of the following conditions apply:

  1. You have no tax liability for 2010.

  2. You were a U.S. citizen or resident for the whole year.

  3. Your 2010 tax year covered a 12-month period

Who must pay estimated taxes depends on one’s situation. In most cases, you must pay estimated tax for 2011 if both of the following apply:

  • You expect to owe at least $1,000 in tax for 2011 after subtracting your withholding and credits, and

  • You expect your withholding and credits to be less than the smaller of: o 90% of the tax to be shown on your 2011 tax return, or o 100% of the tax shown on your 2010 tax return. Your 2010 tax return must cover all 12 months.

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