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How and when to make estimated tax payments

Posted on May 16, 2017

Employees who work full or part time usually have taxes withheld from their pay. But what if you are self-employed, an independent contractor, a freelancer, temporary hire, or an on-call employee?

If you don’t normally have taxes withheld from your paycheck or don’t have enough tax withheld, you may need to make estimated tax payments. Here is what you should know about estimated tax payments from the CPAs at Teipen Selanders Poynter & Ayres:

  • How do you know if you’ll need to make estimated payments? Taxpayers should pay estimated taxes if they expect to owe at least $1,000 in tax for 2017 after subtracting their withholding and refundable credits.
  • How do you figure out what to pay? You will need to estimate the amount of income you expect to receive for the year, taking into account any tax deductions and credits you may be eligible to claim. Get help figuring and paying this by going to irs.gov and locating Form 1040-ES, Estimated Tax for Individuals, or ask your CPA for guidance.
  • When do you make payments? Taxpayers generally make estimated tax payments four times a year: April 18 (2017 only), June 15 and September 15 in 2017. There is one last payment on January 16, 2018 for the 2017 year.
  • What if something changes? Major life changes like getting married or changing jobs can affect taxes. When these changes happen, taxpayers should revise their estimated tax payments for the year. Using the IRS Withholding Calculator tool at gov provides a calculation form.
  • Where do you pay estimated tax? Taxpayers can pay online, by mail, or from their mobile device. Direct Pay is a secure free online service to pay a tax bill or pay estimated tax directly from a checking or savings account. You can also visit gov/payments and pay online. If a taxpayer pays estimated tax through the mail, they should use Form 1040-ES payment vouchers.

Although making estimated tax payments does seem tricky the first year you make them, the system is fairly standard, and allows for adjustments (including refunds) when circumstances change.

Ask your TSPA CPA for more information or calculation help, or check out these helpful IRS materials: