What is IRS Form 1040-ES?
The IRS Form 1040 is an official documents that U.S. taxpayers can use to file their annual income tax return. You can use Form 1040-ES to pay income tax, self-employment tax and any other tax you may be liable for. ES stands for estimated tax, not to be confused with the standard 1040 which relates to the previous year. Depending on the type of income you report, it may be necessary to attach other forms or schedules to it, but the form has easily marked sections where you can report your income and deductions to determine the amount of tax you owe or the refund you can expect to receive.
Who Pays Estimated Tax?
Certain forms of income are not deducted at the source. For example, independent contractors and freelancers need to deduct their own taxes from their pay. Also, earnings from interest, dividends and rent, taxable unemployment compensation, retirement benefits and the taxable part of your Social Security benefits are other examples of income that is not taxed at the source. Consider If you have these types of income and then count on paying estimated tax.
Paying Estimated Taxes
Because the estimated tax payment is based on the estimation of your income for the current year, it’s easy to underestimate, resulting in an underpayment penalty. To avoid this, use your previous year’s taxes as a guide. Simply put, as long as you pay 100 percent of the previous year’s tax, you won’t have to pay the penalty. And don’t worry about overpaying – if you do you’ll receive a tax refund at the end of the year.
This doesn’t apply to quarterly taxes however. Even if you overpaid the total tax due for the year and are eligible for a refund, if you pay quarterly taxes late you will receive a penalty. The Form 1040-ES package includes worksheets to help you account for differences between the previous and current year’s income and calculate the tax you owe. And remember, Success Tax Relief is always here to help
When To File 1040-ES for Quarterly Taxes
Estimated tax payments are due four times in a tax year. Most individuals are calendar year taxpayers with the infamous due date April 15 and lesser known June 15 and September 15 of that current year.
If you work on a fiscal year calendar—the year does not run from January 1 to December 31—then the four due dates are spread through the fiscal year, on the 15th day of the fourth, sixth and ninth month of the year and on the 15th of the first month of the next fiscal year.
Have Success Tax Relief by Making Payments
Pay weekly, biweekly or whatever interval suits you! Just make sure to pay the full amount due for that period. You can also estimate your tax liability for the whole year and pay the estimated tax in one lump sum by the 15th of April of the current year. Visit our site for more great information like this and contact us for special situations.