You usually will have taxes withheld from your pay if you are an employee. However, if you don’t have taxes withheld, or you don’t have enough tax withheld, you may need to make estimated tax payments. If you are self-employed you normally have to pay your taxes with this method. Here are five tips from the IRS about making estimated tax payments:
- When the tax applies. You should pay estimated taxes if you expect to owe at least $1,000 in tax for 2016 after subtracting your withholding and refundable credits. Special rules apply to farmers and fishermen.
- How to figure the tax. Estimate the amount of income you expect to receive for the year. Also make sure that you take into account any tax deductions and credits that you will be eligible to claim. Use Form 1040-ES, Estimated Tax for Individuals, to figure and pay your estimated tax.
- When to make payments. You normally make estimated tax payments four times a year. The dates that apply to most people for 2016 are April 18, June 15 and Sept. 15. There is one last payment on Jan. 17, 2017.
- When to change tax payments or withholding. Major life changes like the birth of a child can affect your taxes. When these changes happen, you may need to revise your estimated tax payments during the year. If you are an employee, you may need to change the amount of tax withheld from your pay. If this is the case, give your employer a new Form W–4, Employee’s Withholding Allowance Certificate. You can use the IRS Withholding Calculator tool to help you fill out the form.
- How to pay estimated tax. You can pay online, by phone or from your mobile device. Direct Pay is a secure online service to pay your tax bill or your estimated tax directly from your checking or savings account at no cost to you. Visit IRS.gov/payments for easy and secure ways to pay your tax. Paying by mail is another option. If you pay by mail, use the payment vouchers that come with Form 1040-ES.
At Account On Us, you can rest assured that you are dealing with a tax preparer that is highly trusted and respected in the community. We are a Diamond Parter in the St. Cloud Chamber of Commerce and have been on the Board of Directors for many years. We are here to serve, guide and direct you. If you’re looking for the best in accounting service, payroll services, tax planning and more… call us at 407.892.1066!