How to Pay Your Quarterly Estimated Taxes

How to Pay Your Quarterly Estimated Taxes
  • Opening Intro -

    Taxpayers who work for themselves know to keep a keen eye on their tax payments, to ensure that Uncle Sam and his state equivalent receive what is due to them.

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Estimating and paying your quarterly federal taxes.

Local taxes, too, sometimes must be paid, giving self-employed individuals a lot to keep track of during the course of the calendar year.

The IRS makes it simple for individuals to pay estimated taxes. An estimated tax is the method the IRS uses for people who earn income that is not subject to withholding. Not just the self-employed should be concerned here — if you bring in a substantial amount of income from rent, dividends, interest and alimony, then paying taxes quarterly may be necessary too.

Let’s take a look at how you can pay your quarterly federal taxes. You’ll need a pen and a calculator to complete your form.

1. Point your browser to the appropriate IRS file. You need to obtain IRS Form 1040-ES for calculating and paying your estimated taxes. Point your web browser to http://www.irs.gov/pub/irs-pdf/f1040es.pdf to find the proper documentation.

2. Review the requirements. On the first page of this form, you will find a paragraph titled, “Who Must Make Estimated Tax Payments.” Read this section to determine if paying estimated taxes is required of you. If not, then read no further — you aren’t required to make quarterly payments. If you are required to pay estimated taxes, then read on.

3. Fill out the worksheet. Go to page 5 of this 12-page document and fill out the 11-step form representing the first part of the estimated tax worksheet. You’ll need to carefully consider what you expect to make in the current tax year as that figure will drive the rest of this form.

4. Complete the form. On page 7 of the document, the worksheet continues. This section is more complicated and needs to be carefully filled out to arrive at a precise estimate. Pay special attention to line 14c — required annual payment to avoid a penalty. Your final total will be multiplied by .25 to cover your first payment. For example, if after all of the additions, subtractions and adjustments are made and your final figure is $3,750, divide that number by 1/4 or multiply it by .25. Your quarterly estimated tax is $937.50, representing the first payment due for the year. That payment is due on or about April 15 or on April 17 in 2012.

5. Go to page 11. On the eleventh page you’ll find “payment voucher 1.” You will need to print this page out, fill out the form and send it to the IRS to the appropriate address for your state, district or territory found on page 4. Write out your check for the proper amount and include it with your form. Your payment must be postmarked by the appropriate date to avoid penalty.

Final Thoughts

Now that you’re done with your estimate, you’ll want to mark the remaining due dates for your quarterly taxes. Those dates may change by a day or two some years, but generally are as follows:

  • First quarter taxes are due April 15
  • Second quarter taxes are due June 15
  • Third quarter taxes are due September 15
  • Fourth quarter taxes are due January 15 of the following calendar year

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