Quarterly estimate payments are used to pay some, or all, of your taxes owed before the actual filing of your tax return. In certain situations, they are required. If they were required, and you did not pay any or not enough, there is a chance that an underpayment penalty will be due on your return. The amount of the penalty varies considerably depending on your situation. It could be anywhere from a few dollars to a few hundred dollars.
If you’re just an employee, you typically do not have to worry about quarterly estimates because your federal taxes are withheld by your employer automatically. You can change the amount that they withhold to adjust to your individual needs. But once you start making money outside of your employment, those withholdings may no longer be sufficient to satisfy your tax liability.
In most cases, you must pay quarterly estimated taxes for the current year if both of the following apply:
1. You expect to owe at least $1,000 in tax for the year, after subtracting your withholdings and any credits you may be getting; and
2. Your total withholdings and credits are less than the smaller of: 90% of the tax owed on your current return, or 100% (in some cases 110%) of the tax shown on your prior year tax return.
The quarterly estimated tax vouchers for 2015 can be found here:
Conveniently, the IRS also lets you make quarterly estimated payments online. The link to make those payments is:
You would select the 1040ES for applying your payment.
Quarterly estimate payments are due by April 15th, June 15th, September 15th, and January 15th.
Still not sure if you need to make quarterly estimates? Contact me today.