08 Jun Estimated Tax Payments
Estimated tax payments for second quarter are coming up due on June 15th, 2021. If you are not accustomed to making estimated tax payments, the following is for you!
What is an Estimated Tax Payment?
Estimated tax payments cover tax on income not subject to withholding, such as income from self-employment, gains from the sale of assets, and more. You may also have to pay estimated tax if the amount being withheld from your salary isn’t enough.
How do I know if I qualify?
Your tax preparer should have provided you a Form 1040-ES if they found you likely will owe $1,000 or more in taxes in the coming year. You can also use the use the Interactive Tax Assistant or read Publication 505 from the IRS.
What if I don’t pay?
You will get an underpayment penalty. Really? Yes, really! By owing less than $1,000 by tax filing deadline, or paying at least 90% of the expected in your 2021 return throughout the year, you can avoid this. If you receive inconsistent income during the year, talk to your tax preparer about other installment payment methods. If you work as a W-2 employee, update your employer withholding using Form W-4 with your HR/payroll service.
How do I pay it then?
Mail your payments with the 1040-ES coupons your preparer gave you, use IRS Direct Pay or pay on IRS.gov using a debit or credit card.
Forget to pay one or more estimated payments? Still have questions if this applies to you? Call us to set up an appointment with a team member, and we can help you!
