What are Estimated Tax Payments?

What are estimated tax payments?

An estimated tax payment is made each quarter to the Internal Revenue Service (IRS). People who earn an income other than W2 (wages) (such as distributions, dividends, rental income, or interest which does not have tax deducted at the source), will need to make these estimated tax payments each quarter to the IRS.

The tax system is a pay as you go (PAYG) system, which means that as income is earned, you should be paying taxes on it. The IRS can levy penalties for not paying enough taxes throughout the year. If you owe less than $1,000, paid at least 90% of the estimated taxes owed for this year, or paid 100% of the taxes shown on the prior year’s tax return, then you will likely avoid any penalties.

If you have any questions about your estimated tax payments, calculations, or requirements to pay, please contact the Handle It Tax Team at 833-202-7676 Ext: 1000 or email sales@handle.it