Can You Pay Estimated Tax Anytime?


Estimated Tax Payments

The U.S. operates a pay-as-you-go tax system. It is a system that requires taxpayers to pay their taxes via withholding or by making estimated tax payments. Since estimated taxes are paid quarterly, some taxpayers assume that it can be paid anytime. However, this isn’t true.

The IRS frowns at making late estimated tax payments and will penalize whoever decides to. You are expected to make your quarterly estimated tax payment before the following deadline: April 15, June 15, September 15 and January 15.

Rather than paying their estimated taxes when due, some taxpayers chose to wait and send payment when they file their tax return for the year. If you have the intention of taking this step, be ready to pay interest and late fee. Before you start deciding on how to make your next estimated tax payment, there are some significant things you need to know. We’ll be filling you in on this important and helpful information as you journey through this article.

Can You Pay Estimated Tax Anytime?

We live in a world where people love doing things at their convenience. We hate being pushed around, given deadlines or told what to do. We like to be free! Do things when we want to. Make payments when we feel like. Deadlines makes us very nervous. It’s like finding yourself in a small stuffy box.

The IRS doesn’t care about your feelings. It has strict rules that you must adhere to. One of those rules is the early payment of your taxes. So if you wish to avoid the bad books of the IRS, don’t make the mistake of paying your estimated tax whenever you feel like.

According to the IRS, you are supposed to make quarterly estimated tax payment on or before the due date. If you fail to pay your estimated taxes on or before the published deadline, you will be charged with interest and penalty. However, taxpayers living in presidentially-declared disaster regions may have extra time to make payments without being penalized.

Additionally, in a situation whereby the deadline falls on a weekend or on a federal holiday, the deadline will be shifted to the next business day.

In the month of March 2020, the IRS shifted the April 15 deadline to July 15. The modification was done in response to the Coronavirus pandemic.

Due Dates for 2020 Estimated Tax Payments:

Payment:When Income Earned in 2020:Due Date:
1st PaymentJanuary 1 to March 31July 15, 2020
2nd PaymentApril 1 to May 31July 15, 2020
3rd PaymentJune 1 to August 31September 15, 2020
4th PaymentSeptember 1 to December 31January 15, 2021
Source: Kiplinger

You may decide not to make the payment due January 15, 2021, if your tax return was filed by February 1, 2021, and you pay the whole balance due with your return.

What Are Estimated Tax Payments?

Individuals who earn income that isn’t subject to federal tax withholding are required to pay estimated taxes on a quarterly basis. This payment is quite common in the U.S. especially with the self-employed or freelancers. Though common, some taxpayers aren’t fully aware of what this payment is. To make things clearer, let’s take a look at what estimated tax payments are.

If you work for yourself, you are required to make estimated tax payments. This payment is to be made four times annually rather than in a single lump sum. It is called “estimated tax payment” because you are estimating your gross annual income and paying taxes on the estimated amount (Self-employment tax, income tax, including other applicable taxes).

Just like your normal tax, estimate tax payments are to be made on or before the deadline. Failure to do this comes with some consequences. The deadlines are on the 15th of April, June, September, and January. So ensure you mark these due dates on your calendar at the beginning of every tax year so it doesn’t slip your mind.

What Does It Mean to Pay Estimated Taxes?

Not every taxpayer is aware of what it means to pay estimated taxes. This is because majority of the taxpayers out there pay their taxes via withholding. So when they hear of the term estimated taxes, they are often confused.

The U.S. operates tax system that requires taxpayers to pay taxes as they earn. The self-employed and individuals who earn income via interest, dividends, rents, gains, etc. are to pay estimated taxes. Estimated tax is a periodic pre-payment of taxes due based on estimated gross annual income.

When you hear an individual say” I want to pay my estimated tax” the individual simply wants to pay taxes on the estimate of his or her gross annual income.

Estimated taxes are often paid quarterly. There is always a penalty for those who end up underpaying. To ensure that you don’t fall victim of such penalty, you must pay a minimum of 90% of taxes owed for a tax year, or 100% of the liability from the preceding year (whichever is smaller).

Is It Mandatory to Pay Estimated Taxes?

When it comes to the payment of taxes, there are lots of questions to be asked and answered, correctly. One of those big questions is regarding the payment of estimated taxes. Is it really compulsory to pay estimated taxes?

It is not compulsory to make estimated tax payments. But, if you eventually end up owing the IRS when you finally file your tax return, then you might be charged with the underpayment of estimated tax penalty.

If you:

  1. Predict that you will owe anything beneath $1,000 in taxes for the tax year after deducting your federal income tax withholding from the overall amount of tax you are expected to owe this year, then you aren’t required to make estimated tax payments.
  2. If you predict that your federal income tax withholding (including any estimated taxes paid early) will add up to a minimum of 90% of the overall tax that you owe for the year, then you aren’t required to make estimated tax payments.
  3. If you predict that your income tax withholding will be not less than 100% of the gross tax on your preceding year’s return, you aren’t required to make estimated payments.

How Much Should I Pay in Estimated Taxes?

Taxpayers are often confused when it comes to certain issues regarding their taxes. Some don’t know how to file their taxes appropriately. Some aren’t aware of the rules guiding the filing and payment of taxes. Some aren’t even aware of the late payment penalty or how much they ought to pay in estimated taxes.

Figuring out how much you should pay in estimated tax is not an easy task especially for those who hate calculations. However, if you are brave you can figure out your estimated taxes by filling out the 1040-ES worksheet. This will help you figure out how much you should pay. Also, have it in mind that to determine your estimated tax, you must determine your expected modified total income, taxable income, taxes, deductions, including credits for the year.

If you aren’t confident of pulling this task off, probably because of your poor math skills or because you feel that you are error-prone, you could hire a tax advisor. A tax advisor has the experience and skills needed to help you out. Their services is not pro bono.

Are Estimated Taxes Still Due April 15?

Estimated taxes are paid quarterly. These quarterly payments are to be made on or before certain deadlines published by the IRS. However, owning to the coronavirus outbreak, the IRS made a little modification to the April 15 deadline.

The new deadline released by the IRS in March replaced the April 15 deadline. The new deadline which was announced as July 15, 2020, was a 90 days extension from the former deadline. All is expected to return to normal next year.

Due to the modification, penalties and interest on unpaid estimated taxes started accumulating on July 16, to the benefits of those couldn’t meet the former deadline. Hopefully, next year there won’t be a cause to modify the April 15 deadline.

How Do I Figure Out My Estimated Quarterly Taxes?

Figuring out your estimated quarterly taxes is one thing, and paying it on time is another. Remember if you underpay your estimated tax, you will be sanctioned. For this reason and any other that may exist, it is best you know how to determine (properly) your estimated quarterly taxes. Here is a hint on how to do that:

To figure out your estimated quarterly taxes, you are to evaluate the amount you’ll owe for the year, then send a quarter of the estimated amount to the IRS. For example, if you expect to owe $20,000 for the year 2020, you are to send $5,000 each quarter. In addition, you can also make use of quarterly estimated tax payment calculator to determine your estimated taxes.

The strategy mentioned above may be quite effective for individuals whose income is constant throughout the year, or for individuals who have a good knowledge of what their income will be. If need be (for instance, in complicated situations), you can hire a tax advisor for advise, clarification regarding the IRS 10 year statutes of limitations for tax debt, or assistance in determining your estimated quarterly taxes.

Download the Quarterly Estimated Tax Calculator if you want to plug in numbers yourself.

Where Do I Send IRS Estimated Tax Payments?

Being aware that you ought to pay your estimated taxes, you do your best to ensure that you make the right calculations for the first quarter. However, and as funny as it seems, you don’t know how to pay.

There a few ways to send your IRS estimated tax payments.You can send payments via:

  • Snail Email: You can do this by obtaining a payment voucher and mailing the IRS your estimated taxes
  • Online: Go to the webpage ( www.directpay.irs.gov ) to make payment
  • Your phone: If you love hearing the voice of an IRS agent, you can put a call across to make your payment.

Alternatively, you can also obtain a Form 1040 ES. This form contains information regard how and where to send your payments.

Remember, sending your payment via the right channel is important. If you make the mistake of sending your payment via a wrong source, you’ll have yourself to be blamed. In case you need more clarification, or you are having issues with your payments, contact the IRS.

Can I Skip an Estimated Tax Payment?

When you work for a firm, it is the responsibility of the proprietor to withhold specific amount of income for taxes. However, if you are self-employed, this responsibility falls on your shoulders. Because life is not a bed of roses, there are times when things get hard. People often find it hard to cater for themselves not to speak of pay their estimated taxes. At that period, you think of skipping your estimated tax payment. However, before you take that step, have you asked yourself if one can skip an estimated tax payment?

You shouldn’t skip an estimated tax payment because doing so comes with consequences. The IRS penalizes taxpayers who skip their estimated tax payments or make payments after the deadline. You should only consider skipping estimated tax payment if you expect to owe less than $1,000 in taxes.

On the other hand, if you expect to owe $1,000 or more in taxes, then skipping an estimated tax payment will get you sanctioned. The IRS expects you to pay your taxes as you go.

How Do I Know if I Made Estimated Tax Payments?

We have lots of things on our mind daily. Thoughts about work, the children, our family, our wellbeing etc. As a result of the countless thoughts that pummel our mind daily, we often forget certain crucial things. One of those things can concern your estimated tax payment. How do you know if you’ve made payment?

If you aren’t sure if you made estimated tax payment, don’t panic. All you have to do is call the IRS. Their agents will check out your payment history using your social security number and may even mail you a statement of your transactions for the tax year in question.

While getting prepared to call the IRS, ensure you have your social security number and other relevant information on ground.

What Happens if I Miss a Quarterly Estimated Tax Payment?

If your income is not subject to withholding and you expect to owe $1,000 or more in taxes, the IRS expects you to make quarterly estimated tax payments. However, things can get ugly if you miss an estimated tax payment.

The IRS penalizes taxpayers who miss a quarterly estimated tax payment for unreasonable reasons. You will be charged even if you are a day late. The penalty comes with interest and is calculated based on what you owe and the duration it was owed.

What Is the Penalty for Not Paying Estimated Taxes?

Taxes are compulsory payments made by income earners and business owners to the government via the IRS. If you don’t work for someone, and you expect to owe $1,000 or more in taxes, you must pay estimated taxes four times annually. Failure to do so, comes with a penalty.

The penalty for not paying estimated taxes is not fixed, it depends on how much you owe and how long it has been owed. You can escape this penalty if you owe less than $1,000 in tax after deducting your withholdings and credit, or if you paid a minimum of 90% of your tax for the present year, or 100% of the tax displayed on your tax return (whichever is smaller).

If your income is received in an unequal manner throughout the year, you may be able to scale through or lower the penalty by estimating your annual income and making uneven payments. Remember, the penalty for filing taxes when you are due for a refund is different from the penalty for not paying estimated taxes when due for refund. Get your facts right so you don’t assume wrongly.

What Happens if You Overpay Estimated Taxes?

Sometimes, rather than underpay your estimated taxes, you overpay! While this may sound surprising to you, it is quite possible. Remember, estimated taxes is all about prediction and estimates. You can make wrong estimates and overpay your estimated taxes.

If you overpay your estimated taxes, the excess amount will be returned to you as a refund. This takes about three weeks for the IRS to sort out and make refunds. However, you will only get your refund when you file your tax return.

If you don’t wish to get a refund, you can apply the excess payment to the next year’s taxes. Remember, you have just three years from the time you filed your return to claim your refund.

Who Is Required to File Quarterly Estimated Taxes?

You are to pay your taxes one way or the other, either via withholding or by making quarterly estimated taxes. However, not everyone is required to pay this taxes, just as not everyone is required to file tax return. So the big question is, who needs to file quarterly estimated taxes?

According to the IRS, you are to file quarterly estimated taxes if you expect:

  • You’ll owe a minimum of $1,000 in taxes for the year, even after deducting your withholding and credit, and
  • If you paid a minimum of 90% of your tax for the present year, or 100% of the tax displayed on your tax return (whichever is smaller). (However, the threshold is 1105 if your modified total income the previous year was over $150,000 for married couples filing together or $75,000 for singles).

Remember, if you are required to make estimated tax payments and you failed to, you will be penalized. Furthermore if you make your estimated tax payments after the deadline, you will be penalized. So start making necessary plans so you don’t miss the next deadline.

Is There a Penalty for Paying Quarterly Estimated Taxes Late?

Some taxpayers believe that they can break the IRS rules without being punished. However, that is not true. The IRS has various punishments for each tax misdemeanor.

Each year, the IRS publish deadlines for estimated taxes. There is a penalty set aside for taxpayers who pay their quarterly estimated taxes after each deadlines. To make things worse, these penalties also comes with interest.

To ensure that you aren’t at the receiving end of these penalties, ensure that you pay your estimated taxes at the right time. The IRS may waive this penalty if you failed to make payment or if your payment was late due to a reasonable cause.

What Does Estimated Tax Deduction Means?

There are lots of terms associated with taxes. And as a taxpayer, it is important that you know the meaning of some of these terms even if you have a professional handling your tax affairs. One term every taxpayer need to be conversant with (especially those making estimated payment) is estimated tax deduction. What is estimated tax deduction?

Estimated tax deduction is a regular advance pre-payment of anticipated taxes due according to the income earned and the amount of estimated tax liability that would have been accumulated as a result.

Estimated tax deduction is made on income that isn’t subject to withholding. That is, income from self-employment, dividend, rental income, interest income, and capital gains.

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