Estimated Tax PaymentsSean Patrick
If you are an independent contractor, have your own business, or do not have federal income taxes withheld from your earnings, you’ll need to estimate tax payments. Our guide gives you insight into calculating your taxes, the deadlines to file, and more.
How Do I Calculate My Estimated Tax Payments?
If you earn the same income each month, you can calculate your total tax liability for the year, then divide this amount by 4. To demonstrate, if you find you’ll owe the IRS $5,000 at the end of the year, you will make quarterly payments of $1,250. When figuring out your tax liability, keep in mind any credits and deductions you took the previous year that might still apply.
However, if your income fluctuates monthly, you can estimate how much you’ll make the rest of the year. You can compare past year’s earnings to help you ballpark an amount. Or, you can take a three-month average of your income if your business tends to have a natural ebb and flow. In both instances, the IRS offers form 1040-ES you can use to determine tax liability.
When are the Estimated Tax Payment Deadlines for 2022?
Here is a look at the filing deadlines for 2022:
- January 18, 2022: If you earned income from September 1, 2021 – December 31, 2021
- April 18, 2022: For income earned January 1 – March 31
- June 15, 2022: On income received from April 1 – May 31
- September 15, 2022: For revenue earned from June 1 – August 31
- January 16, 2023: On income received from September 1 – December 31
How Do I Pay My Estimated Taxes?
There are multiple ways to pay your taxes. You can mail in a check, money order, or cashier’s check with your form 1040-ES. The IRS allows you to set up a Direct Pay through its website, using your bank account or credit/debit card. If you use a card, an additional processing fee applies.
Are There Penalties for Filing Late?
There can be penalties if you file late. They might not apply if your tax liability is less than $1,000 or if you paid 90% of your current year or 100% of the previous year–whichever balance is lower. If neither situation applies and you file late, the IRS can impose penalties for doing so.
Giving Clarity to a Complex Matter
If you have questions about your taxes, our team can provide the answers. Our tax team can help you navigate the complexities of tax law. Most importantly, we can file taxes on your behalf to ensure you remain compliant with federal and state tax laws. Contact us today to learn how we can simplify your taxes.